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ENN, Petrochina, Unipec among Chinese LNG importers seeking US tariff waiver

PetroChina, Unipec and ENN have applied for US LNG tariff waivers since China began accepting temporary tariff exemptions on US-origin goods, including crude oil, LNG and refined products, March 2, sources close to the companies said Monday.

The exemptions would enable PetroChina, which has long-term contracts with US producer Cheniere, to avoid 25% tariffs on LNG. These were imposed by China over 2018 and 2019 in retaliation for US tariffs on Chinese goods, in the ongoing trade dispute between the two countries.

Record low LNG prices in Asia have made shipments of US LNG into Asia uneconomical, while a mild winter and COVID-19 disruptions have significantly hit China’s appetite for the fuel.

China imported 1.53 million mt of US LNG in 2017 and and 1.64 million mt in 2018, customs data showed, then 258,955 mt in 2019, which accounted for less than 1% of China’s total LNG imports of around 60 million mt last year.

Overall imports in January and February were down 6% year on year, as Chinese importers struggled to keep up with deliveries amid disruptions in domestic gas markets as a result of the coronavirus outbreak, S&P Global Platts Analytics data showed.

PetroChina and Cheniere have two long-term contracts for a combined 1.2 million mt/year of LNG. Only a small portion is in effect, with shipments on the balance starting in 2023.

Chinese buyers of US LPG cargoes have mostly been given tariff exemptions for March and April delivery, while applications for the May cycle will commence April 2, LPG trading sources said last week.

“The approval process seems quite fast. The system was opened March 2 and applications had been approved by March 3,” an LPG trader said Friday.
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