‘U.S. PROJECTS MAY END UP DEAD IN THE WATER’
Escalating trade war making American gas less competitive, says LNG Canada
LNG Canada challenged competing United States liquefied natural gas (LNG) projects yesterday, saying many could end up “dead in the water” as long as China keeps its tariff on US imports of the fuel as part of the trade war between the countries.
China last month announced a 10 per cent tariff on US 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 (RM128 billion) LNG Canada project, which is expected to start exporting in 2025.
Speaking at an industry event, here yesterday, LNG Canada chief executive Andy Calitz said the FID “was irrespective” of Chinese tariffs on US LNG, but added such measures would make US 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 happy to be in Canada,” he said.
US LNG exports remain competitive despite the 10 per cent surcharge into China, as US 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 US facilities, saving freight costs while avoiding fees for using the Panama Canal that current US LNG exporters must pay since they are located on the Gulf of Mexico.
Several US projects are still vying for financing and they must compete with rising output elsewhere, including from top producers Australia and Qatar.
Being competitive in China is key as it is the world’s fastest growing LNG import market.