LNG spot market eludes Nigeria as Chinese buyers ask for more

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The U.S.-China trade war is forcing Chinese liquefied natural gas buyers to rush for new suppliers but Nigeria may not benefit because it lacks ability to play in the LNG spot market as the country holds long term contracts.

China had responded to the United States of America by announcing May 13 that it will raise the duty on imports of U.S. LNG to 25 percent from the previous level of 10 percent in retaliation to the U.S. increasing its tariffs on $200-billion worth of Chinese goods. This is making LNG buyers in China gasp for new sources of supply and suppliers.

“U.S. LNG export to China is already seriously affected by the 10 percent tariffs in effect from last year, and we expect it to continue to be so as long as the tariff is imposed”, Per Magnus Nysveen, Rystad Energy head of analysis said.

Rystad Energy forecasts show that Chinese LNG demand will reach 95 metric tonnes per annum (mtpa) in 2025, up from 53 mtpa in 2018. This would make China the world’s largest LNG importer. The U.S., on the other hand, is the fastest-growing LNG exporter thanks to strong Asian and Chinese demand. U.S. export volumes are expected to nearly quadruple over the coming years, reaching 84 metric tonnes per annum (mtpa) by 2025 based on currently sanctioned projects.

But Nigeria has little spare capacity to play in the LNG spot market and cannot take advantage of the window opened up by the U.S.-China trade war. Most of Nigeria’s LNG cargoes are on long-term contracts of up to 20 years in some cases.

“Except Chinese LNG buyers get in on Train 7, which awaits final investment decision later this year, there is no chance that Nigeria’s LNG cargo will find its … Read More...