Cheniere Energy sets up China office to expand sales: sources

BEIJING (Reuters) - U.S. natural gas exporter Cheniere Energy Inc is setting up an office in Beijing to help it clinch long-term supply deals with Chinese buyers, four industry sources said.

Cheniere, which held extensive talks with China earlier this year, will be the first operator of a U.S. liquefied natural gas (LNG) export facility to establish a presence in the country.

The move follows an agreement in May between the U.S and China to boost trade under the so-called 100-day trade talks that will allow Chinese buyers to purchase long-term supplies from the U.S. directly.

World LNG demand is expected to double to about 71 billion cubic feet per day (bcfd) (544 million tonnes a year) by 2040, up from around 32 bcfd in 2015, the U.S. Energy Department estimates, driven by the rapidly growing economies of Asia, particularly China and India.

Cheniere is currently the only company able to export large cargoes of LNG from the continental United States, giving it a leg up to ink long-term contracts with China. Five additional export terminals are expected to open by 2020.

Maggie Jia, senior marketing manager with Cheniere Asia who worked previously for Morgan Stanley and Japanese trading house Mitsui, will relocate from Singapore to head up the Beijing office, the sources with direct knowledge of the matter said.

Cheniere also recently hired Chris Li, who worked formerly with China National Offshore Oil Co (CNOOC) [SASACY.UL] and with China’s energy policy-setting agency, the National Energy Administration, the sources said.

A Cheniere spokesperson did not immediately comment.

“The idea of the China office came after the 100-day trade talks,” said an industry veteran familiar with Cheniere’s thinking. “Now the U.S. welcomes China to sign up long-term deals, while the Chinese government is also encouraging companies to diversify supplies.”

Cheniere already exports LNG to more than 20 countries from its Sabine Pass LNG export facility in Louisiana which began operating in 2016.

China is the world’s third-largest buyer of LNG. It was also the third-biggest importer of U.S. LNG in 2016 but up till now has bought U.S. LNG through short-term, or spot, deals, or from non U.S. companies.

China shipped in 461,720 tonnes of U.S. supplies in the first half of 2017, roughly 3 percent of its total LNG imports, Chinese customs data showed. [O/CHINA7]

China’s state energy giants have already signed multiple term supply pacts with more traditional LNG exporters such as Qatar, Indonesia, Malaysia and more recently Australia as the country looks to cut down on the use of dirtier coal.

A trading executive at state-run Sinopec said in May that the company will consider long-term imports from the United States from 2022.

Reporting by Chen Aizhu, additional reporting by Mark Tay in Singapore; Editing by Richard Pullin