Hopes of a resolution to China-US trade tensions at LNG2019 fail to materialize
The last time such a comprehensive group of LNG leaders gathered in one room was at Gastech in Barcelona in September 2018
Petrotahlil-During the conference, they learned that China had announced the imposition of tariffs on imports of US shipments of the chilled fuel, rattling markets.
Almost seven months later, there was hope that during LNG2019, held on China's home turf, a resolution to trade tensions between Beijing and Washington would be reached. The conference ended Friday without that happening.
China, with its population and economic growth and clean-air goals, which is accelerating the coal-to-gas switch, is a critical market for LNG exporters, particularly US developers looking to secure offtake contracts to fund construction of their terminals. The ongoing stalemate reflects the challenges the industry faces in realizing the full China opportunity.
"There are still some major, major issues left, but we're certainly making more progress than we would've thought when we started," US Trade Representative Robert Lighthizer said Friday of the status of trade talks, before a bilateral meeting at the White House with Chinese officials.
US President Donald Trump's trade adviser Peter Navarro, was equally noncommittal. "We hope for the best, but we'll see what happens."
Half a world away in Shanghai on Friday, LNG market participants laid out the opportunity that exists in the land of China, and the importance of lifting trade flow barriers, as well as promoting pricing mechanisms that incentivize tanker deliveries to China, and more broadly, Asia.
"JKM is the lucrative market," Trinidad and Tobago's energy minister Franklin Khan said during a panel discussion. "Everybody wants their cargoes to come here."
Khan noted that China is expected, in the coming years, to surpass Japan as the world's biggest importer of LNG. However he said, there are obstacles besides trade, such as market dynamics.
"We must be acutely aware of adverse effects and the risks associated with commodity price volatility and unbalanced portfolio arrangements," Khan said.
