According to Reuters, LNG Canada CEO, Andy Callitz, has challenged rival US LNG projects, stating that they will end up ‘dead in the water’ if China continues its 10% import tariff on US LNG imports.
While the US$31 billion LNG Canada project, led by Royal Dutch Shell, was recently granted a final investment decision (FID), many US LNG projects are still struggling with competition for financing. These projects must also compete, not only with Canada, but with rising outputs abroad; particularly from nations such as Australia and Qatar – the current production giants of the industry.
At present US LNG exports remain competitive, despite the current trade war tariffs, due to the abundance and low costs of shale gas. However, once LNG Canada commences operations in 2025, Canadian exporters will gain an advantage.
Above all, Canada holds a geographical advantage over the US; its exports hubs being physically closer to Asian LNG markets than its US counterparts. Canadian exporters in British Columbia also reap the benefits of avoiding costs accrued from traversing the Panama Canal, an unavoidable journey for US LNG exporters located in the Gulf of Mexico.
The prospect of sustained Chinese imports tariffs, paired with increased global competition, certainly sets the stage for some challenging years ahead for US LNG.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/22102018/lng-canada-challenges-us-rivals/