American oil and gas conglomerate, Exxon Mobil Corp. has reportedly made plans to tackle China’s soaring liquefied natural gas (LNG) demands by pouring in substantial capital for expanding the output of the super-cooled gas in places such as Mozambique and Papua New Guinea. Exxon plans to create demand for those supplies in China by opening its first import and storage hub.
Sources familiar with the matter state that the company’s initiative will guarantee Exxon a steady outlet for its LNG for decades. Reportedly, China’s natural gas demand is increasing rapidly, with imports currently soaring well over 10% annually due to the government gasification program and the fast rising industrial demand amongst sectors such as petrochemicals.
Incidentally, Exxon is one of the top ranked U.S. companies that plans on investing in China despite the trade dispute. In addition, some European and U.S. automakers are also seemingly expanding their plants in China to avoid hefty tariffs and transport costs. For instance, Tesla Inc. recently acquired a Shanghai site for a car and battery-manufacturing complex in China.
Sources suggest that, Exxon’s African and Asian LNG will offer a cost benefit against U.S. rivals’ exports that encounter high tariffs and greater transport cost. Moreover, China’s support for the project will also offers a rejoinder to the Trump administration’s complaints about the country’s closed markets.
Darren Woods, CEO of Exxon Mobil was quoted saying that the decision to expand its LNG production and open an import terminal in the world’s fastest growing LNG market is a step to pull the company out of an earnings rut that has left its shares flat over the past seven years.
Reliable sources predict that, in 2019, China will become the world’s largest importer of natural gas, and its LNG imports would rise by about 70% by 2020, from 38.1 million tons recorded last year.