LNG China imports to trump US

AUSTRALIAN liquefied natural gas producers are set to cash in on China’s plans to slap tariffs on US exports of the fuel and feedstock.

China has announced a tariff hike on $ US60 billion ($ 82.8 billion) of American imports in response to an increase on $ US200 billion of Chinese goods, announced by US President Donald Trump.

China’s richest man, Alibaba Group co- founder Jack Ma, has cautioned Chinese business and political leaders to prepare for a trade war that could last for 20 years.

“If you want a short- term solution, there is no solution,” he said.

The latest hikes include China’s plans to levy a 10 per cent duty on LNG exports from America from September 24. The move will likely boost the prospects for low- cost suppliers like Australia, the world’s second- largest LNG producer, along with Papua New Guinea and Qatar.

“Australia’s LNG sector will benefit from the Chinese tariffs on US LNG, as Australia will be more competitive on price compared to US LNG with the tariffs in place, and … Australia will be seen as a lower political risk source,” Credit Suisse analyst Saul Kavonic said yesterday. The tariffs could also boost Asian LNG spot markets, which get small volumes from Chevron’s Gorgon project off Western Australia and Origin Energy’s Australia Pacific LNG project at Gladstone.

A push by Beijing to prioritise the use of gas over coal for its power generation has helped drive global demand for the fossil fuel, with China on track to become the world’s top LNG importer next year, according to the International Energy Agency.

Buyers in China are likely to put off striking deals for US LNG, Mr Kavonic said.

Australian shares rallied yesterday with the ASX 200 up 28.5 points to 6190 points. Shares in Woodside rose 28c to $ 36.93 yesterday while Santos added 15c to $ 7.10 and Origin fell 4c to $ 8.07.