China seeks new LNG suppliers, turns away from the US amid trade war

The trade war between the US and China, which has escalated in recent weeks as tariffs have been steadily raised, is beginning to have concrete effects. Reciprocal tariffs on imports between the US and China, now reaching hundreds of percent, are significantly increasing the cost of trade between the countries. The tariffs are also affecting imports of liquefied natural gas (LNG), with China having stopped importing LNG from the US entirely in March. The country is now seeking alternative sources, with recent deals with the United Arab Emirates among the latest examples.

The international trade situation is escalating as the US and affected countries gradually introduce import tariffs. The effects are also evident in the energy sector, where fears of a global trade war have led to a sharp drop in energy commodity prices in recent weeks. Tariffs that make international trade more expensive between the US and, in particular, China are also redirecting the flow of goods.

According to Reuters, China did not import a single LNG cargo from the US last month. Chinese traders are instead selling US gas on the international market. The US already accounted for a very small share of China’s total LNG supplies last year, at 5%.

More Chinese companies sign long-term deals with the UAE

Chinese companies are signing new long-term contracts with traders in other regions, including the Middle East. One such deal is between state-owned China National Offshore Oil Corporation (CNOOC) and Abu Dhabi National Oil Corp (ADNOC). Under the contract, the United Arab Emirates is expected to supply China with half a million tonnes of LNG annually for 5 years. Although these are relatively small volumes globally, this may not be the last such deal for China.

According to Chinese sources, the contract was signed last weekend and is due to take effect next year. According to Reuters, this is the third long-term contract between Chinese traders and ADNOC. The previous two deals were signed by private company ENN Natural Gas and state-owned trader Zhenhua Oil. ENN’s contract is for the import of one million tonnes of LNG annually over 15 years.