Jan 16, 2020 - Economy

"Phase one" trade deal could spur Chinese purchases of U.S. energy

The newly inked "phase one" U.S.-China trade deal calls for China to boost purchases of U.S. energy products — including crude oil and liquified natural gas (LNG) — by $52.4 billion over the next two years.

Why it matters: China is the world's largest oil importer and second-largest LNG consumer.

But, but, but: S&P Global Platts notes that it "could spur more commercial activity for American liquefaction projects, but much will depend on the fate of existing LNG tariffs."

  • They note that no U.S. LNG cargoes have gone to China since March.

The big picture: "Most of the purchases China committed to making are in 2021, so any recurrence of tensions could undercut the deal," the New York Times reports.

  • "More important, executives noted, China made no explicit pledge to eliminate tariffs on energy imports — 5 percent on crude oil and 25 percent on liquefied natural gas — which they viewed as a response to the administration’s refusal to remove tariffs on Chinese goods."

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