Cheniere Energy shares rose by over 3% Friday. Stock rose after it was revealed that Cheniere Energy had been holding talks with state-owned Chinese firms to increase exports of liquefied natural gas to China.
This may have a connection with the recent meeting between President Trump and Chinese President Xi Jinping. An agreement was reached regarding expanding trade between the two countries. One of the results of this was that China would open its economy to specific products, one of which was liquefied natural gas.
The US Commerce department announced Thursday that a deal had been reached with China that enables state owned Chinese forms to make long-terms agreements to expand LNG imports from American suppliers. We reported on this last week, when a concord appeared to be formed between the United States and China. The two countries had agreed on a relaxation of trade restrictions regarding certain types of goods – LNG exports to China being one of these.
One of these suppliers is Cheniere Energy, who has been supplying China with limited supplies of LNG at spot price from its Louisiana terminal. The firm’s Sabine Pass terminal was commissioned last year. It will now be able to make long term purchasing contracts with the Chinese for liquefied natural gas supplies. Cheniere Energy Shares benefitted from the announcement, even though the company has yet to take advantage of the agreement.
LNG is mainly methane, with small amounts of ethane, propane and butane. In liquid form, it takes up about 1/6000th of the volume of the substance in gaseous form. China offers a vast market for LNG, and its need is growing faster than any other country worldwide. However, time will tell how easy or difficult it will be to take advantage of that growth in demand.
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