The United States is once more an energy exporter, particularly where natural gas is concerned. On Monday, a new deal was announced between an American company, Venture Global, and China Gas Holdings for the purchase of 500,000 metric tons of liquefied natural gas (LNG) every year, starting in 2030.
China Gas Holdings agreed to buy 500,000 metric tons of liquefied natural gas each year from Venture Global beginning in 2030, according to a press release from the companies.
The deal comes despite China maintaining tariffs on U.S. energy products, including a 15% levy on LNG. The LNG tariff remains in place even after China suspended a 24% additional tariff on U.S. goods for one year, Reuters reported.
"Venture Global is pleased to expand our LNG partnership with China Gas, a leading natural gas operator in China, supplying the country's growing energy needs with reliable, low-cost American LNG from across our Louisiana projects," Venture Global CEO Mike Sabel said in a statement.
You can see Venture Global's press release on the deal here. That release describes the companies involved:
Venture Global is an American producer and exporter of low-cost U.S. liquefied natural gas (LNG) with over 100 MTPA of capacity in production, construction, or development. Venture Global began producing LNG from its first facility in 2022 and is now one of the largest LNG exporters in the United States. The company’s vertically integrated business includes assets across the LNG supply chain including LNG production, natural gas transport, shipping and regasification. The company’s first three projects, Calcasieu Pass, Plaquemines LNG, and CP2 LNG, are located in Louisiana along the Gulf of America.
And:
China Gas Holdings Limited and its subsidiaries (the “Group”) is one of China’s largest trans-regional, integrated energy suppliers and service providers. Focusing on China, it is primarily engaged in the investment, construction, and operation of city and township gas pipelines, gas terminals, storage and transportation facilities, and gas logistics systems to deliver natural gas and liquefied petroleum gas (LPG) to residential, industrial, and commercial users.
China is, at present, imposing tariffs on American energy products, including a 15 percent tariff on natural gas. As of this announcement, there is no indication of any deal to exempt Venture Global from the Chinese tariffs, although the actual shipments aren't scheduled to start for four more years.
This is an interesting deal, both economically and geopolitically. It's a good deal for Venture Global, and presumably for China Gas Holdings as well. China, at present, imports about half of its natural gas requirement; its main sources at present are Australia, which provides 34 percent of China's gas, along with Qatar at 23 percent and Russia at 11 percent. It's not in China's interest to be this dependent on foreign sources for its natural gas, and that applies to American gas as well as gas from other sources. But the United States' supply may be more reliable, at least until January of 2029. After that, much will depend on who wins the keys to the Oval Office in the 2028 election. A Democrat in that office may well shut down all American natural gas exports, just like the last Democrat president did.
This deal will be good for American workers. It will be good for China. And who knows? Nations that do business together are somewhat less likely to go to war with each other. But then, the United States did a lot of business with Japan in the 1920s and 1930s.