China imposes 10% tariff on US LNG

China has imposed a 10% tariff on LNG imports from the US, describing the measure as a response to the latest US tariffs on US$200 billion of Chinese goods. The 10% tariff, which includes other products as well to affect US$60 billion worth of trade, will go into effect on the 24^th September, according to China’s Ministry of Commerce.

The tariffs were less than the 25% rate publicly contemplated by China in August 2018.

Crude oil was excluded from the latest tariff announcement.

China’s LNG tariffs, given the size of its market, could hinder development of a second wave of US LNG export projects as final investment decisions approach by making LNG from other export regions more attractive.

In its Gas 2018 annual report released in June, the International Energy Agency predicted that China would become the world’s largest importer of natural gas in 2019, its overall demand expected to grow 60% between 2017 and 2023, reaching 376 billion cubic metres (bcm).

IEA predicted China’s LNG imports would reach 93 bcm over the same period, from 51 bcm in 2017, an 82% rise.

PetroChina and Qatar recently announced a 22-year deal for supply of 3.4 million tonnes/year of LNG produced by Qatargas.

“Such a large deal would have been under negotiation before the early August announcement that China planned to impose 25% tariffs on US LNG imports,” noted Alex Froley, ICIS LNG analyst.

“Nevertheless, the contract will help underpin Qatar’s plan to expand production by 30% (to 100 million tpy) by 2023, while developers of new US LNG export projects must hope that the US-China trade war will cool soon to help them win more of the long-term deals they need to secure FIDs.”

Source: Oil & Gas Journal