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China’s imports of liquefied natural gas have been suspended for more than 10 weeks, according to shipping data showing how the Chinese-American trade war has spread to energy cooperation.
There were no further shipments between the two countries as a 69,000 tonnes of LNG tankers arrived in southern Fujian Province from Corpus Christi, Texas on February 6th.
A second tanker was redirected to Bangladesh after China did not arrive before impose a 15% tariff on US LNG on February 10. Tariffs then made gas uneconomical for foreseeable future Chinese buyers.
The US LNG freeze is a recurring bloc on imports that lasted more than a year during President Donald Trump’s first term.
However, the impact of the standoff has potentially far-reaching effects, strengthening China’s energy ties with Russia and raising questions about the ongoing multi-billion-dollar LNG terminal expansion in the US and Mexico.
“There will be long-term outcomes,” said Anthophy Corbeau, gas specialist at the Center for Global Energy Policy at Columbia University. “I don’t think Chinese LNG importers will be contracting with the new US LNG.”
Since the invasion of Ukraine, China has imported a relatively low share of LNG from the US, and Chinese buyers prefer to resell gas to Europe for profit. Last year, only 6% of Chinese LNG, which fell from the 11% peak in 2021, came from the US.
However, according to Kpler data, Chinese companies, including Petrochina and Sinopec, have signed 13 long-term contracts to purchase LNG from US terminals.
Such a long-term deal has been essential for placing large US LNG projects on the ground, but Corbeau said he recently tried to renegotiate terms to account for rising inflation and costs from US tariffs.
Kpler analyst Gillian Boccara said there was no reason to reboot between the two countries in the short term.
“The last time this happened, there was a full break until Chinese authorities granted businesses exemptions, but that was a time when gas demand was booming,” she said. “We are now looking at lower economic growth and we believe that the Chinese can withstand these cargo losses for quite some time.”
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China’s Russian ambassador said earlier this week that China will likely in turn tighten its imports of LNG from Russia. “I know for sure there are many buyers. So many buyers are asking the embassy to help establish contact information with Russian suppliers.
Russia has emerged as the third largest LNG supplier to China, after Australia and Qatar. The two countries are also negotiating a new gas pipeline, a Siberian force.2.
“When tariffs rise to levels that are effective embargo, we see a reshuffle of trade flows,” says Richard Bronze, on the energy aspect, an energy consultant. “We also expect Asian demand to drop 5-10 million tonnes overall, which should lower gasoline prices a little in Europe,” he added.
