Below is our translation of an article from RIA Novosti with commentary by Vince Dhimos.
Here is just one of many examples of how US tariffs are hurting the US economy. In the case of natural gas, it is an example of how US tariffs wind up inadvertently helping the Russian economy and simultaneously hurting the US.
The psychopaths at RAND Corporation get paid big money to sit around thinking of ways to sabotage Russia’s economy, and this idea it once promoted of having the US sell its energy products to the world while shrinking Russia’s share has been a spectacular fail all the way around. (See Manlio Dinucci's exposé on RAND’s latest plan to destroy Russia).
It makes you wonder why no one ever gets paid just to think up ways to boost America through cooperation with Russia and China. I think that until the US starts thinking along those lines, it will keep taking giant steps toward the dustbin of history. I suspect that at no time in history has a country done so little to lift itself up and so much to shoot itself in the foot as now in America. With governments like Washington’s, America needs no enemies.
China passes sentence on US gas industry
MOSCOW, May 20 - RIA Novosti, Alexander Lesnykh. From June 1, China will increase import duties on US liquefied natural gas from ten to 25 percent, according to the State Customs Committee Tariff Committee. Why this could turn into a catastrophe for the US gas industry and what Russia will gain from a new round of trade war – from RIA Novosti.
Chinese import duties are a response to Washington’s aggressive actions. Two weeks ago, Donald Trump accused Beijing of disrupting trade negotiations and announced an increase in tariffs on the importation of goods from China totalling $200 billion.
Donald J. Trump [on Twitter]
For 10 months, it has been 25% on the 50th, and 10% on the 200th on the USA. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billion dollars ....
May 5, 2019
Trump also promised to extend these measures in general to all Chinese imports. Beijing responded immediately: starting June 1, additional duties on US goods worth $60 billion, including LNG, are being introduced.
Note that the Chinese LNG market is the largest and fastest growing in the world, and therefore the most desired by all exporters of fuel, including the United States. “This year, China’s LNG market will grow by about a quarter,” said Carlos Torres-Diaz, head of the gas market research department at RystadEnergy.
It is precisely in light of this that most of the projects for construction of gas liquefaction terminals in the USA were started. [my highlighting] So, recently Cameron LNG plant with three production lines with a total capacity of 13.5 million tons per year opened in the state of Louisiana.
But because of the trade war, the Americans exported only 300,000 tons of gas to China in four months, compared to 1.4 million tons in the same period last year, Vygon Consulting experts say. And because of the new duties, the deliveries will have to be stopped completely. [idem]
Meanwhile, according to the Federal Energy Regulatory Commission (FERC), five lines with a total capacity of 57 million tons of LNG per year are currently being built in the United States. Projects of five more lines received approval and are waiting for final investment decisions. Now their prospects are very much in question. [This damage to US LNG companies is not being taken into consideration by most analysts and certainly not by Trump. Like the damage to soybean and pig farmers of the original round of tariffs.]
Without China Europe is no help either
New Chinese duties are forcing Americans to turn to Europe. It is no coincidence that last week two senators urgently submitted to the US parliament a bill on sanctions against the owners of ships, are used for laying the Nord Stream 2 [project for Russian-gas pipelines to Europe] pipes, as well as those who provide financial or technical support to the project. Washington has long demanded that Europeans switch from Russian pipeline gas to American LNG.
The loss of the Chinese market can disrupt the American plans for European expansion. As analysts of Rystad Energy calculated, Russia is now supplying gas to Europe at an average price of five dollars per million British fuel units (MMBtu). The break-even point for deliveries of American LNG to Europe is at this same level. In other words, for Americans to sell their gas at the price of Russia means to work without profit.
Washington expected to solve this problem by using parallel deliveries to Asia, where LNG prices are traditionally higher than European ones. But now, without China, the expansion of exports to Europe is extremely unprofitable for the American gas industry.
From Russia with love
Russia gains the most from the new round of the US-China trade war. Domestic companies have good chances to gain market share to which the Americans aspired.
By December 1, the Power of Siberia gas pipeline with a capacity of 38 billion cubic meters of gas per year should be launched. The next step is the construction of another gas pipeline to China through Altai [province in Western Siberia].
“Deliveries of Russian pipeline gas to China via the western route may become the most promising and significant gas transmission corridor,” said Gazprom’s head Alexei Miller at the end of April.
“China continues to steadily increase gas consumption - by 15% in 2017 and by 18% in 2018,” he pointed out. “Import is increasing more actively: last year, by 32%, to 125.7 billion cubic meters. As a result, the PRC for the first time topped the list of the largest importers of natural gas in the world. The demand for natural gas in China will continue to grow, and we are ready to provide it with reliable supplies for the long term."