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China Signs First Long-Term Deal for U.S. Natural Gas; Trump has made U.S. LNG exports a focus of his plans to make America an energy superpower

China Signs First Long-Term Deal for U.S. Natural Gas; Trump has made U.S. LNG exports a focus of his plans to make America an energy superpower

 
Matthews, Christopher M. Wall Street Journal (Online); New York, N.Y. [New York, N.Y]09 Feb 2018: n/a.
 
China has entered its first long-term contract to import U.S. liquefied natural gas, following a push by the Trump administration to open the rapidly growing market to U.S. suppliers.
 
Cheniere Energy Inc., which has already exported LNG to China, said Friday that it had signed two purchase agreements with China National Petroleum Corp. to export LNG from the U.S. Gulf Coast to China.
 
Under the deal, China National Petroleum will receive 1.2 million tons of LNG a year through 2043. A portion of that supply will ship this year and the rest will begin in 2023.
 
President Donald Trump has made U.S. LNG exports a focus of his plans to make America an energy superpower. Commerce Secretary Wilbur Ross announced a deal last May to "expedite" the approvals of U.S. exports to China. While the deal didn't alter any existing regulations, it was billed as a signal to China that U.S. LNG suppliers are open for business.
 
Mr. Trump brought two U.S. LNG executives with him during his trip to Beijing in November, including Jack Fusco, the chief executive of Cheniere, which in early 2016 became the first company to export U.S. LNG from the lower 48 states. During the trip, Cheniere signed a memorandum of understanding with China National Petroleum to eventually enter LNG export contracts.
 
"We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest-growing LNG markets world-wide," Mr. Fusco said in a statement Friday.
 
So far, 34 U.S. cargoes of LNG have landed in China, all of them from Cheniere's facilities, But the deal announced Friday is China's first long-term contract with a U.S. supplier, the Houston-based company said. Such contracts are favored by exporters because they help them line up financing for expensive growth projects.
 
U.S. exporters chill the natural gas to a liquid state so it can be loaded on boats for export, a hugely expensive process.
 
Cheniere didn't disclose the estimated value of the contract but said the purchase price for LNG would be indexed to Henry Hub, the leading North American natural-gas benchmark, which is becoming more important in the global gas trade.
 
China is the fastest-growing importer of LNG, as it seeks to move to cleaner fuels and heat homes in the northern part of the country with natural gas. After importing less than 10 million tons of LNG in 2010, China's imports are expected to grow to more than 60 million tons by 2030, according to analysts.
 
That is potentially good news for U.S. suppliers who have access to vast amounts of natural gas unlocked by U.S. shale drillers.
 
"They're one of the largest economies in the world and they want to use cleaner energy," Michael Wortley, Cheniere's chief financial officer, said in an interview. "I don't see how our country doesn't do lots of business with their country over many decades."
 
Write to Christopher M. Matthews at christopher.matthews@wsj.com
 

Credit: By Christopher M. Matthews