(Reuters) - Cheniere Energy Inc Chief Executive Jack Fusco said on Thursday he does not expect proposed Chinese tariffs on U.S. liquefied natural gas to have an economic impact on the LNG’s company’s existing contracts.
“We don’t foresee an economic impact to Cheniere as it relates to our existing long-term contracts with PetroChina,” Fusco told analysts in a call following the release of the company’s second-quarter earnings.
He was referring to China National Petroleum Corp’s (CNPC) [CNPET.UL] PetroChina subsidiary, which in February agreed to buy about 1.2 million tonnes of LNG per year, or 0.16 billion cubic feet of natural gas per day, from Cheniere through 2043, with a portion of the supply beginning in 2018.
One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.
China, which is embroiled in a trade war with the United States, added U.S. LNG to the list of prospective products it is considering for a 25 percent import tariff.
Prior to the recent slowdown in shipments, China was on track to import 141.6 bcf of U.S. LNG in 2018, up from 103.4 bcf in 2017 and 17.2 bcf in 2016. It imported no LNG from the United States in 2015.
“We are awaiting details of the proposed tariffs and are hopeful that the U.S. and China can resolve the trade dispute without these tariffs being implemented,” Fusco said, noting that U.S. LNG is an “important variable to help resolve trade issues” with China.
“Our business is a very long-term one, and it is well understood that China needs more LNG over the long term,” Fusco said. “We expect to sell meaningful amounts of LNG into China over the long term.”
China, which is trying to wean itself off coal to reduce pollution, became the world’s second-biggest LNG importer in 2017. The United States is on track to become the world’s third-biggest LNG exporter by capacity in 2019 as liquefaction trains under construction enter service.
Cheniere, the biggest U.S. seller of LNG, operates four liquefaction trains at its Sabine Pass LNG export terminal in Louisiana and has four other trains under construction - one at Sabine and three at its Corpus Christi export terminal in Texas.
The deal with PetroChina helped support Cheniere’s decision to move forward with the construction of the third train at Corpus.
Reporting by Scott DiSavino; Editing by Susan Thomas and Paul Simao