Trade deal welcome news for U.S. energy firms but tariffs still cloud outlook

  • The U.S. energy industry offers cautious praise for the signing of the phase one trade deal with China, but executives note the lack of a commitment to remove Chinese tariffs that have hurt their sales over the last two years.
  • The agreement commits China to increasing its energy purchases from the U.S. by $52.4B in 2020-21: $18.5B in 2020 and another $33.9B in 2021, on top of 2017 baseline purchases of $8B.
  • The deal terms do not break down possible purchases by category but list liquefied natural gas, crude oil, refined products and coal.
  • Charles Riedl of the Center for Liquefied Natural Gas says the deal is positive for trade relations, but with a 25% tariff still in place on U.S. liquefied natural gas, "it continues to make it challenging for U.S. LNG to go to China."
  • Cheniere Energy (NYSEMKT:LNG) CEO Jack Fusco, who attended today's signing ceremony in Washington, called the accord "a step in the right direction that will hopefully restore the burgeoning U.S. LNG trade with China."
  • The accord is a hopeful sign for the U.S. natural gas industry, which is facing a global market glut; China, the world's fastest growing buyer of the fuel, has not imported any U.S. cargoes since last February.
  • U.S. oil exports to China also have slumped because of the trade war, but U.S. oil exports have remained steady as shipments to other locations edge higher.
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