The global trade war took another turn when China decided to incur the U.S. with tariffs, creating an uncertainty for multibillion-dollar facilities that deal with natural gas shipment.
By the end of 2019, about six facilities in the U.S. are expected to be exporting liquified natural gas. During the same period, several companies have to decide whether they want to continue the wave of American LNG export. In addition, several of these projects deal with Chinese buyers, which is expected to surpass Japan, the largest consumer of natural gas in the world. However, if China imposes a 25 percent tariff on the U.S. LNG, it will complicate financing for some of these projects. Even though these tariffs have to remain in place for several months, the threat comes at the worst timing as there is not enough capital to finance multiple projects.
China’s Targeting Trump’s Agenda
Several industry watchers are sure that several terminals are already at the risk of shelved owing to lack of money to finance them. Moreover, there are some the U.S. projects that are seeking capital and most of which are built on the U.S. Gulf Coast.
As reported by CNBC, the energy analysts at Raymond James, Pavel Molchanov, stated that even though the politics in China is ignored, there are innumerous early-stage projects, and sadly, most of them will never be built regardless what China decides. The prime reason behind this issue is the scale of demand is excessive, too many early-stage players want to develop an LNG plant.
China has not disclosed the details of these tariffs and not yet made clear how these tariffs affect contracts. On the other hand, although China cannot win the game of tariffs with the U.S., they can target the U.S President, Donald Trump’s agenda to bring back the U.S. at the negotiating table