Cheniere Energy Inc’s lone contracted Chinese customer continues to take committed liquefied natural gas, an executive with the top exporter of U.S. LNG said Wednesday, Kallanish Energy learns.
The January trade agreement between the U.S. and China was expected to open the gates to resuming new energy sales to the Asian country, but since then travel bans and China’s response to the coronavirus have sidetracked discussions and are expected to sharply cut energy use and commercial activity.
China’s 25% tariff on imports of U.S. LNG remains the largest barrier to additional sales, said Corey Grindal, senior vice president of Gas Supply for Cheniere, Reuters reported.
“We don’t sell that much to China. Right now we have one contract and they’re still taking their LNG,” said Grindal, speaking to Reuters on the sidelines of the NAPE Summit in Houston Wednesday. “Coronavirus isn’t the problem. It’s the 25% tariff, and they have still not released that.”
Cheniere two years ago this month announced it had entered into two LNG sale and purchase agreements (SPAs) with China National Petroleum Corp. (CNPC).
Under the SPAs, CNPC subsidiary PetroChina International Company Ltd. agreed to purchase roughly 1.2 million tonnes per annum (Mtpa) of LNG, with a portion of the supply beginning in 2018 and the balance beginning in 2023.
The term of each SPA continues through 2043. The purchase price for LNG is indexed to the Henry Hub price plus a fixed component.
Under the so-called Phase 1 trade deal between the world’s two largest economies, China has committed to buying an additional $52.4 billion worth of U.S. energy supplies, including LNG, over the next two years.
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