Liquefied Natural Gas - Political impacts on global gas trade
Potential Chinese tariffs on US LNG and European concerns over the security of gas supply have the potential to alter forecast global gas flows materially. Growing US LNG exports were expected to make a significant contribution in meeting flourishing Chinese gas demand. However, we believe Trump’s trade war and a retaliatory Chinese LNG tariff could see US molecules redirected to other Asian consumers and the European market, a market looking to develop alternatives to Russian piped gas supply. It is difficult to quantify the precise impact of a potential tariff for US LNG on Liquefied Natural Gas Ltd’s (LNGL) valuation. Fundamentally, the impact is likely to be small as we assume fixed price tolling fee arrangements, but current rhetoric on tariffs is likely to be on the minds of project financiers and gas offtakers, potentially delaying project timelines. For now, we maintain our valuation at A$1.01/share (US$3.18/ADR). The political impasse between the US and China could push back first gas from our current 2024 forecast for Magnolia LNG.Liquefied Natural Gas is developing Liquefied Natural Gas Limited (LNG) export terminal projects in the U.S., Canada, and Australia. Co. focuses on the identification and progression of opportunities for the development of LNG projects to facilitate the production and sale of LNG. Co.'s segments are: LNG Infrastructure, which includes the aggregation of the Magnolia LNG project, Bear Head LNG project, and Fisherman's Landing LNG project; and Technology and Licensing, which focuses on the development of LNG technology, through research and development activities, and the advancement of each developed technology to the patent application stage or ability to commercialise the LNG technology.
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