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OIL AND GAS
U.S. LNG faces headwinds in Asian markets
by Daniel J. Graeber
Washington (UPI) Nov 8, 2017


U.S. energy ambitions to tap into the growing demand in the Asian market could face a challenge from established Russian programs, analysts said.

U.S. President Donald Trump left the 12-nation Trans-Pacific Partnership trade agreement, brokered by his predecessor, during his first week in office. In May, however, the Commerce Department announced advancements with China under a 100-day action plan. Among the agreements steered in part by U.S. Commerce Secretary Wilbur Ross was a decision to allow China, which doesn't have a free-trade agreement with the United States, to receive liquefied natural gas sourced from U.S. basins.

Trump this week starts the Beijing leg of an Asian tour that marks his first visit overseas as president. A pro-oil and -gas president, the tour offers an opportunity to broker more one-on-one energy trade agreements.

"The fact that Trump will arrive in Beijing with a large business delegation in tow, including a sizeable contingent from the energy sector, indicates that the White House is looking to secure concrete commercial agreements from the upcoming trip," Kerry-Anne Shanks, the head of Asian gas and LNG at consultant group Wood Mackenzie, said in an emailed statement. "We would not be surprised if the trip results in several non-binding agreements with U.S. operators for LNG supply."

A special permit is needed to send natural gas to countries without a U.S. free trade agreement, a scenario that could present roadblocks for future LNG exports from the United States given Trump's protectionist trade policies.

The super-cooled LNG offers diverse options for delivery compared with piped gas, which is vulnerable to geopolitical risk. In an annual report this year, Royal Dutch Shell said LNG demand is on pace to grow at twice the rate of conventional gas. China and India, among the fastest growing economies in the world, are leading the pack in terms of growth in LNG imports.

Chinese demand for LNG is on pace to grow by about 30 percent from last year by 2020. Beijing, meanwhile, sees natural gas in general as a clean-fuel component of a greening economic agenda. That means, Wood Mackenzie said, that China could represent about 30 percent of total gas demand growth through the middle of the next decade.

Hugo Brennan, an Asian analyst at Verisk Maplecroft, said that U.S. LNG would need to compete with cheaper regional deals, which may come from nearby countries with strong LNG portfolios like Qatar and Australia.

Russia, meanwhile, has already expressed commitments to pivot to Asia. Last week, Russian independent gas producer Novatek reached an agreement with a Chinese bank to help implement a Arctic LNG project. China is already linked to Russian oil supplies through the East Siberia-Pacific Ocean pipeline.

Despite growing U.S. energy export capacity, the analysts said there may better options for China.

"Most notably, US suppliers face stiff competition from Russia," the report read. "Energy cooperation has developed into the central plank of the bilateral relationship."

Russian President Vladimir Putin talked up the growing energy partnership with China during his summer visit to Beijing.

OIL AND GAS
US urges action after Saudi accuses Iran over missile attack
Riyadh (AFP) Nov 7, 2017
The United States called Tuesday for international action to hold Iran to account after Saudi Arabia accused Tehran of "direct military aggression" over a Yemeni rebel missile attack near Riyadh. The Iran-backed Huthi rebels also threatened to attack ports and airports in Saudi Arabia and the United Arab Emirates, escalating a crisis between Riyadh and Tehran. Saudi Arabia's powerful cro ... read more

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