China’s voracious appetite for natural gas has sparked a wave of deals with US exporters of the fuel, strengthening energy trade between the world’s two biggest economies even as their relationship grows more fraught.
The latest sales were announced on Monday when Venture Global LNG, a company building a pair of liquefied natural gas export plants in Louisiana, said it had agreed two contracts to ship 3-5m tonnes a year of the fuel to state-owned China National Offshore Oil Corporation, the country’s biggest LNG importer.
The Cnooc deals bring to seven the number of big contracts signed between US exporters and Chinese customers since October. Some of the contracts are to last decades. China is poised to surpass Japan as the world’s largest LNG buyer this year, analysts say, while the US will leapfrog Australia and Qatar in LNG export capacity next year, according to its Energy Information Administration.
Tensions between Washington and Beijing have escalated over everything from China’s persecution of Uyghurs in Xinjiang and the crackdown on the pro-democracy movement in Hong Kong to its military activity near Taiwan. China has meanwhile accused the US of acting like a hegemon and trying to create a cold war between the powers.
Gas sales, by contrast, are another sign of ties between the two powers on energy and climate issues. The two governments also defied expectations to reach an agreement on addressing climate change at last month’s COP26 summit in Glasgow and have negotiated a joint release of strategic oil stockpiles to cool prices.
“The US-China relationship in many respects is at a very low point,” said Jason Bordoff, dean at Columbia Climate School and a former energy official under president Barack Obama. “But energy and climate are a potential bright spot where there can be more co-operation notwithstanding the tension and conflict. ”
Venture Global had already signed agreements in November to send 4m tonnes a year of LNG to China’s state-owned oil and gas group Sinopec for 20 years, along with shorter-term agreements totalling 3-5m tonnes with its trading subsidiary Unipec. One of the new contracts with Cnooc is also for 20 years.