Potential Tariff Drives CNPC to Halt Cheniere's LNG Imports

According to sources, CNPC is mulling to halt the long-term contract with Cheniere to import LNG from the U.S. from this winter as well as other spot U.S.-origin cargoes, because of the recently listed potential 25% tariff on U.S.-origin LNG cargoes by China government.

The escalating trade dispute between the two world-top economic entities drove energy trading ups and downs in crude and eventually involved the LNG sector as foreseen. Though China government removed the crude oil from the latest 25% tariff list, CNPC, together with most LNG buyers in China put concerns in medium-term LNG purchase from the U.S. in fear of the extremely high cost caused by firm price currently in the international market and the 25% tariff together.

The U.S. LNG is considered as the most important supplementary support for China’s skyrocketing development in the natural gas sector. Its market share is minor, only taking up 17% of U.S. LNG exports and 5% of China LNG imports in the first half of 2018, but the potential is promising, agreed by both sides. However, in fear of the trade dispute and tariff, the import volume avalanched to only two cargoes or 130,000 tons in July, and the volume will remain low in a foreseeable short to medium term. 

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