Washington Needs This LNG Deal More Than Beijing Does

Xi Jinping arrives in Washington September 24, prepared to discuss reviving a $6 billion-a-year trade in US liquefied natural gas, contingent on lifting a 15% Chinese tariff that has blocked American gas since Q1 2025. Iranian missiles destroyed 17% of Qatar's LNG export capacity in March, and China absorbed that shock by buying more from everyone except the United States: Australia took 36% of its LNG imports from January through July, Southeast Asia 20%, Russia 12%, and Canada, a new entrant, 4%, according to Banchero Costa data. American cargoes made up 0.2%. Beijing's 15% tariff, imposed in February 2025, days into Trump's second term, cut recorded US LNG shipments to China from 64 vessels in 2024 to zero in 2025. At their 2021 peak, US cargoes made up 12% of China's total LNG imports, worth $6.2 billion that year. None of the underlying contracts were canceled. Chinese buyers kept honoring them, but then resold the cargoes into Europe and Asia rather than pay the tariff to deliver them home.Iranian missiles struck Qatar's Ras Laffan Industrial City on March 18-19, destroying two of Qatar's 14 LNG production trains and a gas-to-liquids facility, costing the country an estimated $20 billion a year in lost revenue. The damage knocked out roughly 17% of Qatar's export capacity, with repairs estimated at up to five years. QatarEnergy declared force majeure on long-term contracts, an order later extended into August as repairs ran long. A second explosion hit the same complex on June 22 during restart operations, killing at least 13 workers, all from India and Pakistan. Qatar claimed the blast was a technical malfunction, not sabotage or a renewed attack. But since then, Qatar has had to buy its way around its own shortfall. It purchased nearly three dozen US spot LNG cargoes from Venture Global, the same U.S. producer China just signed a long-term deal with, to keep its own delivery commitments to Japan, South Korea, India, Bangladesh, and Taiwan. Only a Fraction of China's LNG ImportsThe $6 billion figure attached to this trade is a 2021 number, not a current one. American cargoes made up 0.2% of China's LNG imports between January and July this year, per Banchero Costa data cited by Forbes. The war that opened this opportunity has cost the U.S. $38 billion+ in its first four months alone.China Gas Holdings signed a 20-year deal with Venture Global on September 14 for 500,000 metric tons of LNG a year, with deliveries starting in 2030, with Beijing's 15% LNG tariff still in force the day it was signed. That volume covers well under 1% of China's total 2025 LNG imports of 68.43 million tons.Washington is treating the contract as evidence a tariff breakthrough is close, but the contract itself sets no tariff terms and requires none. Deliveries begin in 2030, giving Beijing four years to remove the tariff, renegotiate it, or leave Chinese buyers reselling their US cargoes elsewhere, the arrangement that has held since 2025. China Gas secured supply without committing to import a single cargo under the current tariff regime.Chinese companies already hold close to 25 million tonnes a year of US LNG offtake, signed since 2018 under 20 to 25 year contracts, according to Forbes. Fifty times more supply was already under contract before this 500,000 tonnes deal existed.In the meantime, three major forecasters have cut China's LNG demand outlook by 14 to 22 million tons for the early 2030s: S&P Global, Wood Mackenzie, and JPMorgan. China's own 2025 total, 68.43 million tons, was a three-year low. Reuters attributes the decline to Beijing shifting toward piped gas and renewables.Washington and Beijing are discussing a package that would lower tariffs on roughly $30 billion of each side's exports, LNG among them, ahead of the September 24 summit.However, a tariff cut would restore a trade once worth $6.2 billion at 2021 prices into a market that no longer resembles 2021. Now, we’re looking at lower Chinese demand forecasts and a bigger role for piped gas and renewables. China spent the tariff years building supply relationships with Australia, Southeast Asia, Russia, and Canada instead of the U.S.Reuters estimates 24.5 million tonnes a year of Gulf Coast LNG capacity now under construction has no long-term buyer. Cheniere's 2022 agreement with PetroChina committed 1.8 million tonnes a year through 2050, with roughly half that volume conditional on a positive FID for additional Corpus Christi capacity. Cheniere approved that expansion (Midscale Trains 8 and 9), in June 2025, and the Chinese contract helped determine whether the project moved forward or not. Venture Global was already at 91% contracted for 2026 and 75% for 2027 before China Gas signed anything. And the China Gas deal doesn’t apply until 2030. Sempra (Port Arthur Phase 2) is fully subscribed at FID, with definitive 20-year SPAs totaling 10 mtpa, and Woodside (Louisiana LNG Phase 1), with 16.5 mtpa nameplate capacity, has confirmed up to 6.7 mtpa in some form of commitment. By Charles Kennedy for Oilprice.comMore Top Reads From Oilprice.comU.S. Threatens to Ground Iranian Airlines WorldwideOil Prices Reverse Course as Traders Watch US-Iran DiplomacyNorway's Arctic Oil Pitch Falls Flat in Brussels