China Reluctant To Sign Long-Term U.S. LNG Supply Deals Amid Trade Spat

China doesn’t welcome the signing of more long-term LNG supply deals between Chinese state-owned natural gas giants and U.S. exporters as the tensions between the world’s top two economies and energy consumers escalate, Energy Intelligence reports, citing industry sources in China.

The Chinese authorities have sent the state-held gas majors the recommendation discouraging them from signing up for more long-term LNG supply from the United States. The recommendation does not include purchases of LNG from the U.S. on the spot market, according to Energy Intelligence’s sources.

The United States and Qatar are frontrunners – by a mile – as the LNG exporters best positioned to capture the global demand for additional supply capacity over the next two decades. That’s the estimate by Wood Mackenzie, which sees the abundant, low-cost natural gas resources in the world’s current top two LNG exporters as the key factor for their export capacity growth.   

In addition, the U.S. and Qatar also have competitive pricing and “astute commercial partnering,” which could secure them a combined market share exceeding 60% by 2040, WoodMac says.

Earlier this year, Europe and China were in an intensifying competition to sign long-term supply deals with U.S. LNG developers and exporters. 

Not so long ago, China was looking at the U.S., apart from Qatar, to secure long-term LNG supply after last year’s energy crisis put an additional emphasis on Chinese energy security.

In the summer of 2023, Cheniere Energy signed a long-term deal with China’s ENN to deliver LNG to the Chinese buyer for more than 20 years—the second deal between Cheniere and ENN.

China was the first to sign a 27-year LNG supply deal with Qatar—the longest such agreement in history—at the end of last year. Since then QatarEnergy has signed three separate deals with European majors to deliver LNG for 27 years beginning in 2026 to France, the Netherlands, and Italy.

By Tsvetana Paraskova for Oilprice.com

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