Fitch: Chances of China entering Arctic LNG-2 rise over trade war

MOSCOW, Jul 6 (PRIME) -- Worsening trade and economic relations between China and the U.S. improves the chance of China entering a U.S. $25.5 billion liquefied natural gas project Arctic LNG-2 of independent gas producer Novatek, Dmitry Marinchenko, director for natural resources and commodities group of international rating agency Fitch, told PRIME on Friday.

The U.S. import duties on 818 types of Chinese goods with a combined annual imports of U.S. $34 billion came in force on Friday. China countered the decision with a 25% import duty on U.S. goods of the same cost, including products of the energy sector.

“In this situation, Russia can actually establish itself as a more reliable supplier, and raise exports of oil and gas…Worsening relations between China and the U.S. at this moment raises chances of China entering Russian project Arctic LNG-2,” Marinchenko said.

As of today, China imports about 500,000 barrels of oil and oil products per day from the U.S., which accounts for about 3% of the country’s oil and condensate output, he said.

“China is likely to assume a pragmatic position and cut purchases of oil from the U.S. that were usually done under short-term contracts, replacing oil with LNG, including LNG from the U.S. It is not in China’s interests to stop purchases of LNG while the country is trying to switch the economy to a more ecological track,” he said.

The Arctic LNG-2 plant will be launched in 2022–2025, and fields of the Gydan Peninsula in the north of West Siberia will become its resource base.

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