If China targets American liquefied natural gas (LNG) in the latest battle of trade wars, it could spell trouble for all U.S. energy companies. In August 2018, the Chinese government announced that it wanted to start charging a 25 percent tariff on American LNG fuel. This is causing speculation across all energy companies, and they are scrambling to make operations as efficient as possible to survive whatever comes.
According to Futureon, producers of software designed to make life easier in the oil fields, adopting such technology gives U.S. companies an edge. “As the digital oil (and natural gas) field changes, your employees can see more about current work limitations and make more forward-thinking choices to become an industry leader.”
Implications of the Chinese Tariff Retaliation
The Chinese tariff threat would be a setback for emerging energy companies. Additionally, it would increase pressure on the U.S. energy industry that’s under fierce competition with Australia, Qatar and Russian for rights to the fuel needs for China, which is the world’s largest buyer of gas.
Chinese tariffs indicate that President Xi JinPing is testing Donald Trump’s resolve and endurance for a real trade battle. Trump’s reaction could stunt U.S. gas exports and derail plans to invest heavily in projects to ramp up U.S. production.
It’s more important than ever that these countries run an efficient operation and utilize software and other innovations to help them achieve that goal.
Chinese Companies Could Shy Away from U.S. Energy Providers
Chinese companies may hesitate to invest U.S. LNG projects if the trade war continues. Australia and Qatar would benefit thanks to their reputations as a lower risk source. On the positive side, demand is growing, so China may be forced to deal with Trump to reach a resolution that works for everyone. China is stockpiling energy sources like LNG, which experienced a 47 percent increase in the first half of 2018. The Asian nation is still the third-largest buyer of U.S. energy resources but the U.S. share of the new demand is less than 6 percent of those purchases.
Meanwhile, it the trade war abates, according to Bloomberg, U.S. companies could gain 20 of the market by 2030. This, in turn, could lower the trade deficit with China by up to $50 billion. About 15 U.S. project proposals target investment decisions and await agreements that could keep money flowing into their coffers.