Reuters is reporting that Exxon Mobil Corp. is continuing to pursue trade with China in spite of the recent US-China trade war tariffs. The company is very much bucking the trend with this strategy, as most of Corporate America has set its sights elsewhere in order to avoid the tariffs.
The company’s strategy follows two tracks:
- Expansion of LNG output in locations such as Papua New Guinea and Mozambique.
- Creation of demand for supply from these locations in China by establishing the company’s first import and storage hub.
A fundamental strength of this strategy is the fact it allows Exxon to sidestep the trade war entirely, as the company’s large scale projects in Papua New Guinea and Mozambique will not incur the 10% import tariff placed on US gas.
Surging Chinese demand for LNG, currently increasing by over 10% annually, will also help make this bold venture profitable for Exxon Mobil; somewhat negating the impact of the extra costs.