Exxon Mobil bets big on China LNG

In the middle of a Sino-US trade war, the world’s largest publicly traded oil and gas company is turning toward Beijing for business at a time when most of Corporate America is looking elsewhere to avoid the threat of tariffs.

Exxon Mobil Corp is placing big bets on China’s soaring liquefied natural gas (LNG) demand, coupling multi-billion dollar production projects around the world with its first mainland storage and distribution outlet.

Its gas strategy is moving on two tracks: expanding output of the super-cooled gas in places such as Papua New Guinea and Mozambique, and creating demand for those supplies in China by opening Exxon’s first import and storage hub, according to an Exxon manager and people briefed on the company’s plans.

That combination “will guarantee us a steady outlet for lots of our LNG for decades,” said the Exxon manager who was not authorised to discuss the project and spoke on condition of anonymity. One of the company’s top policy goals this year, the manager said, is building its Chinese client roster. “China’s natural gas demand is rising really fast, with imports soaring well over 10 per cent annually at the moment because of the government gasification program and due to fast rising industrial demand, including in petrochemicals,” the Exxon manager said. An Exxon spokesperson declined to provide an executive to discuss the company’s LNG investments in China.

Years in the making, the strategy delivers an added benefit: helping Exxon sidestep a global trade war. Exxon’s massive LNG projects in Papua New Guinea and Mozambique will not incur the 10 per cent tariff China put on US gas as part of the trade war between the Trump administration and Beijing.