China hungry for more US LNG deals

China hungry for more US LNG deals

China, which has overtaken Japan as the world’s largest buyer of liquefied natural gas (LNG), needs to agree more supply deals to meet surging domestic gas demand. This offers US exporters, such as Cheniere (NYSE:LNG), a significant opportunity, especially as trade tensions ease.

In recent weeks, numerous LNG supply contracts have been signed by China with US LNG export projects. Indeed, as analysts at Macquarie point out, the barriers preventing the natural marriage of low cost and flexible US shale gas supply with China, the world’s largest and structurally growing LNG consumer, appear to have been overcome and more deals should follow. These contracts should allow a third wave of US LNG projects to move into the construction phase, reckons Macquarie.

Significantly, with abundant low-cost shale resources, US LNG costs less than almost anywhere else in the world, with Qatar perhaps the exception, therefore the US should increase its share of the Chinese market, added the bank.