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The first U.S. floating liquefied natural gas (LNG) project continues to plan future steps in its progress despite the U.S.-China trade war, a top manager at one of the project’s partners told Reuters on Thursday.
The first U.S. floating LNG (FLNG) project, Delfin LNG, is planned to be located nearly 50 miles off the Louisiana coast in the U.S. Gulf of Mexico. According to the project’s website, it could use up to four FLNG vessels which would cut coastal LNG traffic, while minimize near-shore environmental impacts.
As early as in November 2017, Delfin Midstream, the developer of the Delfin LNG project, signed a preliminary agreement with China Gas Holdings, a city gas distributor, to supply 3 million tons of LNG annually.
But China, the world’s fastest-growing LNG demand market, slapped a 10-percent tariff on U.S. LNG imports amid the heated trade tariff tit-for-tat last summer.
Yet, Wouter Pastoor, the chief operating officer Delfin Midstream, told Reuters today that a resolution to the trade deal could arrive soon.
“We do not believe the tariffs and trade disputes will last long,” Pastoor told Reuters.
Delfin is currently working with a Chinese shipyard for the FLNG vessel and sees strong interest from China for both converting FLNG vessels and for importing LNG, according to Pastoor. Delfin has also seen strong interest from Chinese banks, among others, for financing of the project, the manager told Reuters.
Related: Local Gas Shortage Threatens Australia’s LNG Dream
The partners in Delfin LNG target a final investment decision (FID) by the end of 2019, potentially launching production in the latter half of 2023.
Earlier this week, Reuters reported that China’s biggest refiner Sinopec is preparing to sign a 20-year LNG supply deal with Cheniere Energy when the U.S.-China trade conflict gets resolved as many in the energy market anticipate. If the U.S.-China trade war ends with a mutually agreeable deal, this would mean a lot not just for established exporters such as Cheniere, but for newcomers on the market who need funding to build their export terminals. To get it from banks, however, they need long-term delivery commitments and these have become hard to come by amid the trade dispute.
Besides the planned projects, there are three more due to come on stream by the end of this year: the Cameron LNG in Louisiana, the Freeport LNG in Texas, and the Elba Island LNG plant.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.