National Post

LNG Canada says China’s tariff could hurt U.S.

- OsAmu tsukimOri

NAGOYA, JAPAN • LNG Canada challenged competing U.S. liquefied natural gas (LNG) projects on Monday, saying many could end up “dead in the water” as long as China keeps its tariff on U.S. imports of the fuel as part of the trade war between the countries.

China in September announced a 10 per cent tariff on U.S. LNG imports as part of an escalating trade war between the world’s two biggest economies.

This month, Royal Dutch Shell said it received a final investment decision (FID) for its US$31 billion LNG Canada project, which is expected to start exporting in 2025.

Speaking at an industry event in Nagoya on Monday, LNG Canada Chief Executive Andy Calitz said the FID “was irrespecti­ve” of Chinese tariffs on U.S. LNG, but added such measures would make U.S. LNG less competitiv­e.

“The world has become so competitiv­e that if we are to face a 10 per cent surcharge tariff on LNG, then as far as I’m concerned, you’re dead in the water. So I’m very happy to be in Canada,” he told Reuters.

Current U.S. LNG exports remain competitiv­e despite the 10 per cent surcharge into China, as U.S. natural gas is cheap thanks to booming shale output, allowing exporters to offer LNG at competitiv­e rates.

Once operationa­l, LNG Canada will have the advantage of being closer to Asia’s North Asian consumer hubs than U.S. facilities, saving freight costs, while also avoiding fees for using the Panama Canal that current U.S. LNG exporters must pay.

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