All eyes in the liquefied natural gas industry are on four tankers carrying what could become the first U.S. LNG shipments to China in more than a year.
Three of the tankers left from two facilities owned by Houston liquefied natural gas company Cheniere Energy while one of them left from a facility owned by San Diego utility company Sempra Energy. All four of them are headed to LNG import terminals in Tianjin, China, marine shipping records show.
Currently passing by the Cape of Good Hope in Africa, the SK Resolute left Sempra’s Cameron LNG terminal on March 22 and is expected to arrive in China on April 30.
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Departing from Cheniere’s Corpus Christi LNG terminal on March 25, the Palu LNG already passed through the Panama Canal and is expected to arrive in Tianjin on April 22.
The Hoegh Giant and Cool Explorer left Cheniere’s Sabine Pass LNG terminal in Louisiana in late March but took different routes, marine traffic records show. Working with a May 5 delivery date, Hoegh Giant is going around the Cape of Good Hope while Cool Explorer already went through the Panama Canal and is expected to arrive in China on April 22.
A trade war with China and related tariffs made U.S. LNG exports too expensive but the four shipments left after the Chinese government granted tax waivers to some importers, Reuters reported. The last U.S. LNG export to China left Cheniere’s Sabine Pass LNG terminal in February 2019, U.S. Department of Energy records show.
Traveling around Africa adds 13 days to the shipments but S&P Global Platts reported that taking more time appears to be a deliberate choice. Delaying the arrival time, Platts reported, may allow shippers to take advantage of a contango where the futures price of LNG is expected to be higher than the spot price.
“It essentially becomes floating storage,” LNG industry expert Michael Webber told Platts. “If the spot pricing is weak and there is contango in the curve, depending on how the pricing is structured, maybe you want to take the time getting there.”