Under the plan, PetroChina would boost buying of spot cargoes from other countries or swap US shipments with other nations in East Asia to avoid paying additional tariffs, said the people, who asked not to be identified because the information isn’t public. PetroChina, a unit of the state-owned China National Petroleum Corp., couldn’t immediately comment when contacted by Bloomberg.
China said this month that it was considering a 25% tariff on US LNG, which had been missing from previously targeted goods, in a direct hit to American gas exporters. The move comes ahead of the winter heating season when demand and prices typically peak and shows that Chinese President Xi Jinping may be willing to suffer some pain to avoid backing down from US President Donald Trump’s trade dispute.
“If the tariff is implemented before winter, it would potentially increase the competition for non-US supply to the Asian market and hence drive up spot prices in Asia this winter,” Maggie Kuang, an analyst with Bloomberg NEF in Singapore said in an email. “Australia, Qatar, and Southeast Asia will most likely benefit.”
Singapore Exchange Ltd.’s North Asia Sling spot price was assessed at $10.165 per million British thermal units as of Friday, the highest in a month. Prices are about 66% higher than the same time a year ago. PetroChina dropped as much as 2.2% to HK$5.80 a share before trading at HK$5.82 at 10:57 am in Hong Kong. The city’s benchmark Hang Seng Index slid 1.8%.
PetroChina in February signed a 25-year deal to buy US LNG from Cheniere Energy Inc., with a portion of that supply expected to start this year. While China is currently the third-largest buyer of US LNG, American cargoes only made up about 5.7% of its imports over the last year, according to Sanford C. Bernstein & Co.
China’s proposed tariff may temporarily benefit other suppliers, US Department of Energy Deputy Secretary Dan Brouillette said in an interview in Tokyo on Wednesday, noting that he doesn’t expect any detrimental impact to the US energy industry.
President Xi has urged China’s state-owned energy giants CNPC and China National Offshore Oil Corp. to boost domestic exploration and production of oil and gas to safeguard the country’s energy security as the trade dispute with the US threatens to limit American shipments.