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    Cheniere CEO Sees No Impact from Chinese Tariff Threat


China remains key long-term market for US LNG

by: Dale Lunan

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Cheniere CEO Sees No Impact from Chinese Tariff Threat

US LNG developer Cheniere Energy said August 9 it sees no material impact from threatened 25% tariffs on Chinese imports of US LNG, and remains confident that the two countries will resolve their trade dispute without implementation of the tariffs.

Speaking on Cheniere’s 2Q 2018 conference call, Cheniere CEO Jack Fusco said the company is awaiting details of the proposed tariffs, and expressed hope that the US and China would be able to resolve their dispute without the tariffs being implemented.

“Having said that, we don’t foresee any economic impact to Cheniere as it relates to our existing long-term contracts with PetroChina, which helped support the financing of Train 3 (at Cheniere's Corpus Christi LNG project in Texas),” Fusco said.

In February, Cheniere signed a pair of agreements with China National Petroleum Corporation subsidiary PetroChina International covering the supply of 1.2mn metric tons/year over terms extending to 2043.

Some of that supply could begin later this year, with Train 1 at Corpus Christi expected to achieve first LNG in the fourth quarter, while the rest will begin in 2023, when Train 3 is expected to be completed.

China is widely expected to see continued demand growth for LNG, Fusco said, and US supplies will be “an important variable to help resolve trade issues” between the US and China, as that trade “is beneficial to both nations.”

“China is an important growth market for Cheniere and we continue to build and solidify our relationships with key Chinese counterparties, as we expect to sell meaningful amounts of LNG into China over the long term,” he said.

In the first half this year, the global pull on LNG grew by almost 15mn metric tons, Anatol Feygin, Cheniere’s executive vice president and chief commercial officer, told the conference call, with nearly all demand growth concentrated in Asia, and most of that coming from China.

“Chinese LNG demand alone grew by more than 8mn metric tons in the first half, exceeding 24mn metric tons, an increase of more than 50% from the first half of 2017,” Feygin said. “After a strong winter, demand held firm in the second quarter as [China] continued the implementation of – and compliance with – environmental policies.”

In May 2018, he said, China for the first time became the world’s largest natural gas importer, with an estimated 10.5bn ft3/day of total LNG and piped gas receipts.

Cheniere reported a 24% increase in 2Q 2018 revenue, to $1.54bn (all financial figures are in US$) from $1.24bn, and lowered its net loss for the period to $18mn from $285mn, partly on the strength of the contribution of new trains at its Sabine Pass terminal in Louisiana.

During the quarter, the company exported 219 trillion Btu (TBtu) of LNG in 61 cargos, up from 170 TBtu in 48 cargos in the same period last year.