China eyes Russia LNG amid trade tension

Given that China has turned to Russia for liquefied natural gas (LNG) imports amid escalating Sino-US trade tension, experts warned that the trade disputes might extend to the energy sector if the US imposes tariffs on more Chinese imports.

According to a report from domestic news site thepaper.com, China and Russia are negotiating cooperation on pipeline natural gas. If they reach an agreement, Sino-Russia natural gas trade volume is expected to exceed 70 billion cubic meters in the next 10 years, the report said, citing Nur Bekri, the director of the International Cooperation Department of the National Energy Administration in China.

By then, Russia will become the largest supplier of natural gas to China.

Sun Yang, a natural gas analyst at bulk commodity services provider chem365.net, told the Global Times on Sunday that with the proposed LNG contract with Russia, it seems that China is indeed preparing for a “final shot” against the US amid the escalating Sino-US trade row.

“Previously, China excluded LNG from a list of proposed retaliatory tariffs that it seeks to impose on US goods, indicating that we are still leaving space for negotiations, a stance China has insisted on during the ongoing trade tension with the US,” Sun said.

“China’s imports of LNG from the US have also grown very fast recently. Many LNG plants in the US are seeking to cooperate with China because of the large market," Sun said.

According to a Reuters report in May, more than two dozen proposed US LNG plants are waiting for customer commitments to reach a final investment decision, and many of them looking to China for deals.

"These enterprises might be influenced," Sun noted.

Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told the Global Times on Sunday that if Sino-US trade really deteriorates, China is poised to take countermeasures with the same proportion and scale if the US imposes further tariffs on Chinese imports.

Considering China's limited overall imports from the US, it's highly possible that trade tensions will extend to the energy sector.

On Friday, US President Donald Trump said he's "ready" to put tariffs on all $505 billion of Chinese goods imported to the US, CNBC reported.

“The energy sector, especially the LNG sector, is where the two could have reached an agreement, since the US needs to export its resources while China has the demand to import them,” Wang said, adding that the cooperation is mutually beneficial.

“Given the situation, China has resorted to Russia for imports, but for the US, it will lose a big LNG export market it could have got access to,” Wang noted.

China will become the world’s top importer of natural gas next year, boosted by LNG purchases, the International Energy Agency said in its Gas 2018 annual report.