China has oil and gas trump card on US

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neverfail
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China has oil and gas trump card on US

Post by neverfail » Wed May 06, 2020 6:16 pm

:lol: This would be funny were it not potentially so loser-tragic. :(
https://asiatimes.com/2020/05/china-has ... ard-on-us/

China will likely withhold promised big new energy purchases if US ramps up new trade tensions

DA NANG – The Donald Trump administration is ramping up retaliatory rhetoric against China over its handling of the coronavirus crisis and its corresponding devastation, a renewed trade war threat that promises to hit US energy producers if and when China retorts in kind.

(snip)

Last month, Trump said he was considering new tariffs on Chinese goods on top of an existing 25% levy punitively imposed on some US$370 billion worth of Chinese goods. If implemented as threatened, it will be bad news for America’s already beleaguered oil and gas producers.

US producers have already been hurt by the trade war. US crude oil exports to China, the world’s largest importer, were zilch in the first quarter of this year due to trade tensions. That’s eroded hard-fought market share US producers had previously steered away from entrenched Chinese suppliers, including oil kingpins Saudi Arabia, Russia and others.

US liquefied natural gas (LNG) imports to China were also hit last year by a punitive 25% levy, throwing several US LNG project proposals into doubt due to the likely lack of long-term Chinese off-take deals. Those proposals have also been stymied by the likely lack of Chinese investment needed to reach final investment decisions (FID).

In April, China procured its first US LNG cargo since March 2019, and has signaled that as many as four more are on the way. Now, with Trump’s ramped up trade war rhetoric and anti-China messaging in his re-election campaign, those promised new LNG imports will be in jeopardy if the US leader pushes through with his new threats.

China has not indicated how it would respond to a renewed trade war push, but last year’s tit-for-tat gives some indication on the energy front. In March 2019, as trade tensions spiked, Beijing hit US LNG imports with a 10% levy, then upped that duty to a prohibitive 25%.

The tariffs strategically hit the US energy industry’s underbelly, namely its LNG sector, which is increasingly trying to compete with top producers like Australia, Qatar and others for global market share.
:lol:

What I find utterly absurd about this scenario is that the global prices of both oil and natural gas are well below production costs in the USA - and likely to remain so for years to come.

So it stands to reason that each barrel of oil exported from the US to China at a loss to producers would amount to subsidised energy provided to the PRC by the USA at cost to the latter. :lol:

(To compound their error, they now want to tie up the markets of other importing countries like Japan, South Korea, India and Vietnam with the same loss-making product.)

Luckily China has been merciful towards the USA by not insisting on deliveries from that source but has continued importing oil and LNG from alternative sources where the price is presumably far closer to production costs.

What a farcical trade war! :lol:

Wake up, you bunch of dopes! It is a buyers' market for oil and gas out there now - not a sellers' market.

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Doc
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Re: China has oil and gas trump card on US

Post by Doc » Thu May 07, 2020 1:34 am

neverfail wrote:
Wed May 06, 2020 6:16 pm
:lol: This would be funny were it not potentially so loser-tragic. :(
https://asiatimes.com/2020/05/china-has ... ard-on-us/

China will likely withhold promised big new energy purchases if US ramps up new trade tensions

DA NANG – The Donald Trump administration is ramping up retaliatory rhetoric against China over its handling of the coronavirus crisis and its corresponding devastation, a renewed trade war threat that promises to hit US energy producers if and when China retorts in kind.

(snip)

Last month, Trump said he was considering new tariffs on Chinese goods on top of an existing 25% levy punitively imposed on some US$370 billion worth of Chinese goods. If implemented as threatened, it will be bad news for America’s already beleaguered oil and gas producers.

US producers have already been hurt by the trade war. US crude oil exports to China, the world’s largest importer, were zilch in the first quarter of this year due to trade tensions. That’s eroded hard-fought market share US producers had previously steered away from entrenched Chinese suppliers, including oil kingpins Saudi Arabia, Russia and others.

US liquefied natural gas (LNG) imports to China were also hit last year by a punitive 25% levy, throwing several US LNG project proposals into doubt due to the likely lack of long-term Chinese off-take deals. Those proposals have also been stymied by the likely lack of Chinese investment needed to reach final investment decisions (FID).

In April, China procured its first US LNG cargo since March 2019, and has signaled that as many as four more are on the way. Now, with Trump’s ramped up trade war rhetoric and anti-China messaging in his re-election campaign, those promised new LNG imports will be in jeopardy if the US leader pushes through with his new threats.

China has not indicated how it would respond to a renewed trade war push, but last year’s tit-for-tat gives some indication on the energy front. In March 2019, as trade tensions spiked, Beijing hit US LNG imports with a 10% levy, then upped that duty to a prohibitive 25%.

The tariffs strategically hit the US energy industry’s underbelly, namely its LNG sector, which is increasingly trying to compete with top producers like Australia, Qatar and others for global market share.
:lol:

What I find utterly absurd about this scenario is that the global prices of both oil and natural gas are well below production costs in the USA - and likely to remain so for years to come.

So it stands to reason that each barrel of oil exported from the US to China at a loss to producers would amount to subsidised energy provided to the PRC by the USA at cost to the latter. :lol:

(To compound their error, they now want to tie up the markets of other importing countries like Japan, South Korea, India and Vietnam with the same loss-making product.)

Luckily China has been merciful towards the USA by not insisting on deliveries from that source but has continued importing oil and LNG from alternative sources where the price is presumably far closer to production costs.

What a farcical trade war! :lol:

Wake up, you bunch of dopes! It is a buyers' market for oil and gas out there now - not a sellers' market.

Trolling for China again I see.
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

neverfail
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Re: China has oil and gas trump card on US

Post by neverfail » Thu May 07, 2020 3:02 am

Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.

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Sertorio
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Re: China has oil and gas trump card on US

Post by Sertorio » Thu May 07, 2020 3:14 am

neverfail wrote:
Thu May 07, 2020 3:02 am
Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.
Rational beings should not be controlled by hatred or spite, but the "exceptionals" of this world think that other people will only believe they are exceptional if they insist on belittling other nations. China, like any other country, has good and bad things, so it isn't rational to keep insisting only on its (real or imaginary) bad things. As it is, China may do more for peaceful relations in the world than the US has been able to do since the end of WW2.

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Doc
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Re: China has oil and gas trump card on US

Post by Doc » Thu May 07, 2020 8:59 am

neverfail wrote:
Thu May 07, 2020 3:02 am
Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.
Oh you mean you are trolling for yourself.. Independent contractor?
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

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Doc
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Re: China has oil and gas trump card on US

Post by Doc » Thu May 07, 2020 9:00 am

Sertorio wrote:
Thu May 07, 2020 3:14 am
neverfail wrote:
Thu May 07, 2020 3:02 am
Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.
Rational beings should not be controlled by hatred or spite, but the "exceptionals" of this world think that other people will only believe they are exceptional if they insist on belittling other nations. China, like any other country, has good and bad things, so it isn't rational to keep insisting only on its (real or imaginary) bad things. As it is, China may do more for peaceful relations in the world than the US has been able to do since the end of WW2.
Personally I enjoy belittling the CCP Which is definitely not China and does not represent it people.
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

neverfail
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Location: Singapore

Re: China has oil and gas trump card on US

Post by neverfail » Thu May 07, 2020 3:14 pm

Doc wrote:
Thu May 07, 2020 8:59 am
neverfail wrote:
Thu May 07, 2020 3:02 am
Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.
Oh you mean you are trolling for yourself.. Independent contractor?
No, just enjoying a laugh at the absurd situation the US has got itself into re. sales of US oil to the PRC. Unless you own shares in a US shale oil firm then so should you doc.

Trump entered into a "stage one" draft trade agreement that obliged the ORC to buy more oil and LNG from the US: but the world price of both has dropped well below the average US production cost of both. So no US producer wants to sell. :oops:

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Milo
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Re: China has oil and gas trump card on US

Post by Milo » Thu May 07, 2020 4:08 pm

This idea that hydrocarbon can attain some kind of "market share", like a brand of beer, is so patently absurd that I really hate to expend the energy to say that much.

No purchaser with the intelligence of a housefly would care about anything when buying it except the price.

If China, a huge importer, wants to pay more in order to put a few US companies out of business until they're back in business, they can all day for all I care.

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Doc
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Re: China has oil and gas trump card on US

Post by Doc » Thu May 07, 2020 7:09 pm

neverfail wrote:
Thu May 07, 2020 3:14 pm
Doc wrote:
Thu May 07, 2020 8:59 am
neverfail wrote:
Thu May 07, 2020 3:02 am
Doc wrote:
Thu May 07, 2020 1:34 am

Trolling for China again I see.
:lol: :lol: :lol:

Nah! Just laughing at the USA.
Oh you mean you are trolling for yourself.. Independent contractor?
No, just enjoying a laugh at the absurd situation the US has got itself into re. sales of US oil to the PRC. Unless you own shares in a US shale oil firm then so should you doc.

Trump entered into a "stage one" draft trade agreement that obliged the ORC to buy more oil and LNG from the US: but the world price of both has dropped well below the average US production cost of both. So no US producer wants to sell. :oops:
AS if that were the only issue on the plate. :roll:
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

neverfail
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Location: Singapore

Re: China has oil and gas trump card on US

Post by neverfail » Thu May 07, 2020 11:33 pm

Milo wrote:
Thu May 07, 2020 4:08 pm
This idea that hydrocarbon can attain some kind of "market share", like a brand of beer, is so patently absurd that I really hate to expend the energy to say that much.

No purchaser with the intelligence of a housefly would care about anything when buying it except the price.

If China, a huge importer, wants to pay more in order to put a few US companies out of business until they're back in business, they can all day for all I care.
Who said that the PRC was deliberately boycotting US oil "to put a few US companies out of business". Not I milo!

The point I made was that because of high production costs in the US it is sub-economic (unprofitable) for US firms to sell to China at the prevailing global price. Hell, it is even currently unprofitable for them to sell in the United States.

The current price of West Texas Intermediate Crude is US$26.37. I believe that the price needs to be about US50.00 per barrel for shale oil producers to break even ahead of production costs. Above that price is profit: below it is loss.

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