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PetroChina Mulling to Suspend US LNG Purchases
PetroChina Mulling to Suspend US LNG Purchases

PetroChina Mulling to Suspend US LNG Purchases

PetroChina Mulling to Suspend US LNG Purchases

PetroChina Company Limited may temporarily halt the purchase of US liquefied natural gas spot cargoes through the winter to avoid potential tariffs amid a trade conflict between the US and China, according to people with knowledge of the strategy. Under the plan, PetroChina would boost buying of spot cargoes from other countries or swap US shipments with other nations in East Asia to avoid paying additional tariffs, said the people who asked not to be identified because the information is not public, Bloomberg reported.
US LNG has accounted for 5.7% of China's imports over the last year. China said this month it was considering a 25% tariff on US LNG, which had been missing from previously targeted goods, in a direct hit to American gas exporters.
The move comes ahead of the winter heating season when demand and prices typically peak and shows that Chinese President Xi Jinping may be willing to suffer some pain to avoid backing down from US President Donald Trump’s trade dispute.
“If the tariff is implemented before winter, it would potentially increase the competition for non-US supply to the Asian market and hence drive up spot prices in Asia this winter,” Maggie Kuang, an analyst with Bloomberg NEF in Singapore, said in an email.
“Australia, Qatar and Southeast Asia will most likely benefit.”
Singapore Exchange Ltd.’s North Asia Sling spot price was assessed at $10.16 per million British thermal units as of Friday, the highest in a month. Prices are about 66% higher than the same time a year ago. Shares of PetroChina ended 2% lower at HK$5.81 in Hong Kong, compared with a 1.5% drop in the city’s benchmark Hang Seng Index.

 

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