Cheniere says LNG exports to China could double its size, but trade war needs to end

Key Points
  • Cheniere Energy thinks it can double the size of its company through liquified natural gas exports to China.
  • It already has sent over 60 tankers with LNG to China from its Sabine Pass terminal, the first LNG export terminal in the lower 48 states of the US.
  • Cheniere CEO Jack Fusco says current trade tensions between the U.S. and China need to be resolved.
Cheniere CEO: We're dedicated to the China market

Cheniere Energy CEO Jack Fusco said his company could ultimately double its size from Chinese demand, but the current trade rhetoric between the U.S. and China needs to come to an end.

U.S. liquified natural gas exports are a part of the trade discussions between the U.S. and China, and both countries see it as an area for expansion. Cheniere Energy is expected to be a winner once a trade deal is concluded.

LNG is a form of natural gas that is super-chilled and turned into a liquid for transport by sea. Cheniere has been a pioneer in the industry, and its Sabine Pass on the Gulf Coast was the first U.S. LNG export facility in the lower 48 states.

"I'm not going to speak about our commercial negotiations. China, as we've talked about, has been a real focal point for the company. We are dedicated to that market. We've sent over 60 tankers to China so far from our facility at Sabine Pass," he said in an interview with CNBC. "We've got a strong relationship with the counterparties in China, and we're expecting good things to happen there."

The Asia Vision LNG carrier ship at the Cheniere Energy terminal in this aerial photograph taken over Sabine Pass, Texas, Feb. 24, 2016
Lindsey Janies | Bloomberg | Getty Images

Fusco said at lower levels the trade dealings with China are good, but at higher levels the trade talks have ramped up tensions.

"At the lower levels, we don't see much change. There's two willing counterparties trying to talk about terms. ... At the upper level, though, there's some tension, and I think until the tension gets smoothed out ... it's going to be rocky and it's going to be lumpy. And we're just going to have to be patient."

Greater Asia demand also is growing. "Asia grew last year a whole Cheniere in size, so more than 30 million tons of LNG just in growth alone was attributable to Asia. So we're not only focused on China but we're focused on Asia more broadly," Fusco said.

But he sees the most potential impact from China. The country is working to build out its infrastructure for the next four to five decades and gets natural gas via pipeline from Russia, LNG shipments and from its own drilling.

"We could double the size of the company, Cheniere, with China, just from their demand," Fusco said. "They need us. We need them. We're hoping some of this rhetoric dies down," he told CNBC.

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