China Turns Away from U.S. Gas as Russia Fills the Gap

Liquefied natural gas from the United States has vanished from Chinese ports, signaling a fresh rupture in energy ties between the world's two largest economies.

In a fresh setback to U.S.-China economic ties, no liquefied natural gas (LNG) from the States has entered China since early February, sources familiar with the matter reveal.

The development signals a substantial shift in energy trade dynamics between the world’s two largest economies.

Earlier this year, Beijing raised import duties on U.S. LNG to 49%, compared to 11% on other suppliers.

The move, which took effect in mid-January, follows a period of heightened trade friction and reduced U.S. energy imports into China—a trend linked to political tensions.

As a new tariff deadline passed this week, one U.S. LNG tanker was seen diverting from Fujian province to Bangladesh.

At least two other vessels, loaded with American gas, are expected to shift course in the coming days to avoid paying the high duties.

The move will further freeze multi-billion-dollar deals between Chinese and U.S. firms, which had been sealed over the past two years.

Several sources disclosed that those contracts, mainly with PetroChina and Sinopec, are now largely in stasis, with notional volumes largely unclaimed.

The calculus changed drastically in early 2023 when Beijing raised tariffs on U.S. LNG to 49%, a measure viewed as retaliation for Trump-era duties on Chinese goods.

The shift in duties is set to price out U.S. LNG from China, effectively shutting out American gas for the second time in recent years.

During the 2018-2020 U.S.-China trade standoff, U.S. LNG was absent from Chinese ports for two years, before returning in 2021 following a trade truce.

However, this time, the absence of U.S. gas in China could last far longer, and the consequences could be more permanent.

Several U.S. suppliers confirmed that they are in talks with Chinese buyers to adjust terms on long-term contracts.

The move comes amid rising inflation in the U.S., which has led to increased costs for producers of LNG, a natural gas derivative, in the Gulf of Mexico.

At the same time, overall Asian LNG consumption has slowed in response to mild weather and a post-Covid recovery slowdown in China.

The combination of factors could lead to a scenario of excess LNG supply in the global market, which may in turn put downward pressure on European gas prices.

While China historically sourced a relatively small share of LNG from the U.S., the current halt underscores how quickly geopolitical tensions can redraw global energy flows.

In contrast, access to Russian gas is widening. The two countries are in talks to expand the Power of Siberia 2 pipeline and increase liquefied gas trade.