Donald Trump and Xi Jinping have agreed that China will increase the imports of U.S. natural gas along with other products such as agricultural goods. China and the U.S. will also invest jointly in the development of infrastructure that will be needed for the processing of the gas.
This is what sources close to the talks between the two presidents told the Wall Street Journal, adding that later this month there will be a joint communiqué regarding all new bilateral agreements.
Despite its huge trade deficit with China, at US$309.6 billion last year, the U.S. exported goods worth US$115.8 billion, making the Asian economy its largest goods trading partner. Overall exports to China stood at US$169.3 billion, according to the Office of the U.S. Trade Representative. Imports, on the other hand, totaled US$478.9 billion. Goods imports from China were US$462.8 billion. Overall, China was the third-largest goods export market for the U.S. in 2016.
The natural gas agreement between Trump and Xi could have important implications for the U.S. energy industry. America is emerging as a serious contender for a piece of the global LNG market, with more than a dozen LNG terminals being built on the Gulf Coast and on the East Coast, with producers eager to tap international markets despite the current oversupply thanks to inflows from large-scale offshore LNG projects in Australia.
China is a natural destination for U.S. LNG. The country’s liquefied gas imports have been growing, hitting this February the second-highest monthly rate since records began, at 3.4 million tons. The increase is part of plans to increase the share of natural gas in the country’s energy mix, to 10 percent by 2020. Secure, cheap supply from the U.S. would certainly help hit the target. For the U.S., the agreement will support the transformation into a net gas exporter, which, according to the EIA, should happen as soon as next year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.