Cheniere Energy To Boost LNG Export To China On Trump's Deal

 | May 15, 2017 07:03AM ET

Houston-based natural gas exporter, Cheniere Energy, Inc.’s (NYSE:LNG) shares rallied more than 3.3% on May 12 to close at $48.68, following President Donald Trump’s recent trade deal with China. The deal aims at bolstering U.S. trade access and exports to China, including LNG exports, which will pave way for Chinese importers to secure LNG contracts from US suppliers.

Until now, Chinese buyers did not purchase long-term LNG supplies from the U.S. directly. This deal will help the developers to target Chinese buyers directly and is also likely to support direct Chinese investment into liquefaction and upstream developments in U.S.

Over the last month, Cheniere Energy had extensive negotiations with Chinese entities regarding LNG exports to China. The recent trade deal will accelerate shipments to China. Cheniere Energy is currently the only company exporting LNG cargoes from the continental U.S. The company has exported nine LNG cargoes to China on spot market since the opening of the Sabine Pass terminal in 2016. With the deal, it is now looking forward to secure long-term contracts from the Chinese companies.

The new trade agreement will connect U.S. – the fastest growing LNG supplier – to China, the largest LNG growth market. The LNG demand in China is expected to grow to 75 million metric tonnes per year by 2030 which is almost triple its 2016 imports. However, the deal which paves way for a wave of LNG investment in U.S might also put more pressure on competing suppliers. This in turn is likely to intensify the competition in an already glutted global market.

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Cheniere Energy is primarily engaged in liquefied natural gas-related businesses. The company owns and operates the Sabine Pass liquefied natural gas terminal in Louisiana through its 57.9% ownership interest in and management agreements with Cheniere Energy Partners, L.P. (NYSE:CQP) .