LNG, ethanol sellers buoyed by China trade talks
(Reuters) - China's interest in reducing its trade surplus with the United States through increased energy imports could advance plans for U.S. liquefied natural gas (LNG) plants and ethanol sales, said analysts and energy executives involved in developing new LNG facilities.
Washington and Beijing stepped back from the brink of a full-blown trade war after talks last week, with the United States appearing to set aside
"China represents an enormous economic opportunity for U.S. LNG and ethanol exports as both products will likely see dramatic demand growth in the coming years, during which time the United States is also expected to dominate global export markets," Katie Bays, energy analyst at Height Securities in Washington, DC, said in a note on Tuesday.
Bays estimated that substantial LNG sales commitments could bring in $20 billion to $30 billion annually and ethanol sales could reach $5 billion to $7 billion annually. She noted, however, that the LNG and ethanol markets were not big enough by themselves to meet President Donald Trump's goal of reducing the Chinese trade deficit by $200 billion per year.
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Charlie Cone, LNG Proprietary Analyst for energy data provider Genscape, said at least 13 percent of total U.S. LNG cargoes currently go to China. "We expect this number to grow as more U.S. firms sign long-term agreements with Chinese buyers as their nation continues to develop its gas infrastructure," Cone said.
Bays said a hold on the trade war could drive Chinese customers to sign new LNG contracts with Cheniere Energy Inc's Sabine Pass or Corpus Christi facilities, Sempra Energy's Cameron, Freeport LNG, NextDecade Corp's Rio Grande, or Pembina Pipeline Corp's Jordan Cove.
"We see it as a positive development," said William Daughdrill, director of health, safety and environmental matters at Delfin Midstream. Its chief executive was in Asia last week pursuing customers, Daughdrill said.
Delfin is proposing a floating LNG facility in the U.S. Gulf of Mexico and aiming for a final investment decision as early as this year to go ahead and produce up to 13 million metric tons per annum (
"For us, it's strictly been about marketing to China," said Greg Vesey, chief executive of LNG Ltd, which is developing an LNG plant in Louisiana and another in Nova Scotia in Canada. It hopes to reach a final investment decision on the U.S. project by year-end and begin exports in 2022, he said.
"If you look at some forecasts for 2035, there are really only two places that have significant increases in LNG imports. Europe goes up about 100
Texas LNG, which is proposing a 4-
"Sentiment in the LNG markets is heating up again," said Langtry Meyer, co-founder of the company. He added, however, that Texas LNG was not considering developing an import terminal in China, which would likely be needed to expand U.S. exports.
Cheniere, which signed a long-term LNG supply deal with a Chinese firm earlier this year, this month said it would soon make a final investment decision on a third liquefaction line at its Corpus Christi, Texas, facility.
As for ethanol, Bays at Height Securities said ethanol producers like Archer Daniels Midland Co and Green Plains Inc could benefit from negotiations with China given the political importance of corn producers to Trump, coupled with China's need to increase ethanol imports dramatically to meet
(Reporting by Scott DiSavino in New York; Writing by Gary McWilliams; Editing by Lisa Shumaker and Tom Brown)
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