March 11, 2019 / 5:12 PM / 5 months ago

U.S. energy exports a lever in trade talks with China -Perry

(This March 11 story officially corrects in paragraph 3 that Perry was talking about leverage around the globe, not China, regarding U.S. nuclear power technology)

FILE PHOTO: U.S. Energy Secretary Rick Perry attends a news conference after meeting with Iraqi President Barham Salih in Baghdad, Iraq December 11, 2018. REUTERS/Thaier al-Sudani

By Timothy Gardner

WASHINGTON (Reuters) - Rapidly expanding exports of U.S. fossil fuels, including liquefied natural gas (LNG), serve as leverage in trade negotiations with China, Energy Secretary Rick Perry said on Monday.

“It’s part of the mix, it may not be the driver, but it’s always hanging out there as part of the matrix,” Perry said in an interview on CNBC. “America now has the ability to use that in a very positive way when it comes to trade negotiations.”

When asked if U.S. energy was a lever in the talks, Perry said, “Yeah, sure it is.” In addition, Perry said Washington can also use advanced U.S. technology on renewable energy and small modular nuclear reactors as leverage around the globe.

The United States is the world’s fastest-growing exporter of LNG and China is the fastest-growing importer of the fuel. Natural gas emits far less unhealthy pollution and carbon dioxide, the main greenhouse gas, when burned.

While the U.S. LNG business is booming, shipments are controlled by private companies. Perry did not explain how leverage could be used, but the Trump administration could conceivably prolong tariffs or take other measures if China, or other major buyers, place tariffs on U.S. oil or LNG exports or energy technology.

The governments of the world’s two largest economies have been locked in a tariff battle for months as Washington presses Beijing to address long-standing concerns over Chinese practices and policies around technology transfers, market access and intellectual property rights.

The countries are working to achieve a trade deal that matches the interests of both sides and the hopes of the world, including eliminating tit-for-tat tariffs, a senior Chinese official said over the weekend.

China Petroleum and Chemical Corp, known as Sinopec, plans to sign a 20-year LNG supply agreement with Cheniere Energy once China and the United States end the dispute, sources said this month. The deal could be worth roughly $16 billion.

Still, the trade war contributed to a 20 percent fall in U.S. LNG shipments to China last year from the previous year. The shipments also slipped on weak demand for heating amid mild winter weather.

That does not erode Perry’s confidence about China’s hunger for U.S. LNG, even if all of the more than a dozen U.S. LNG projects being developed were completed.

“As we look at India, as we look at China, these massive economies, we probably need more projects than we’ve got on the books today to be able to meet that demand,” Perry said.

Last month the Federal Energy Regulatory Commission, or FERC, approved Venture Global LNG Inc’s Calcasieu Pass LNG export plant in Louisiana. The company said it had binding 20-year sale and purchase agreements with Royal Dutch Shell Plc and BP.

Reporting by Timothy Gardner in Washington; Editing by James Dalgleish

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