Trump administration making deals to expand US liquid natural gas sales
A deal to open the Chinese market to U.S. liquefied natural gas exports could break Qatar's grip on LNG pricing — even if no additional American supplies ever reach the Asian powerhouse.The US shale revolution continues to roil world energy producers who are losing their near monopoly on fossil fuels. Trump appears tp be setting the US industry up for some wins in the Asian markets with this move. Texas stands to profit from this move with the expansion of LNG export terminals from Brownsville in the Lower Rio Grande Valley to Sabine Pass near the Louisiana border.
Last week, the U.S. Commerce Department said it had reached an agreement with Chinese authorities that would see Beijing give state-owned companies the green light to negotiate long-term contracts with U.S. LNG exporters, something it has been hesitant to do.
On Thursday, Commerce Secretary Wilbur Ross suggested the White House would aim to boost LNG exports not just to China, but other nations with whom the United States posts a trade deficit, including Japan, the world's top LNG importer.
The mere prospect of China buying more of the fuel from the United States stands to upend the global LNG market. It would give the world's biggest buyers — Japan, South Korea and China — leverage in negotiations with top supplier Qatar and other major players. That could in turn shift prices paid for LNG across the world.
In Asian markets, most LNG is sold in long-term contracts, with prices indexed to the price of oil. Those contracts can be renegotiated, and last week's deal between Beijing and Washington could loom large in future negotiations, according to Benjamin Salisbury, senior energy policy analyst at FBR Capital Markets.