Donald Trump to push shale gas deals on India visit

Donald Trump is planning to push American shale gas when the US President travels to India this week.

LNG exporter Cheniere Energy has struggled to secure long-term agreements due to the low-price environment surrounding natural gas. Picture: Bloomberg

US President Donald Trump is planning to push American shale gas when he travels to India this week. So far, US gas exports have proved to be a tough sell globally.

US companies have struggled to line up foreign buyers willing to sign long-term deals for liquefied natural gas as the world is experiencing a glut of the fuel.

Global buyers including India have instead turned to an increasingly liquid spot market for cheaper LNG, threatening the future of more than two dozen additional natural-gas export ­facilities proposed in the US, which need sizeable advance commitments from buyers to ­secure the billions needed for the projects to go forward.

The US has quickly become the world’s third-largest supplier of liquefied natural gas, thanks to the bonanza of fuel unlocked by the fracking boom. But US companies have struggled to sell more than spot cargoes, amid competition from rivals in Qatar, Russia and Australia.

From 2011 to the end of 2015, US suppliers struck 37 long-term sales deals with foreign buyers for a combined 67 million tonnes of gas a year, according to S&P Global Platts. Much of that total reflected deals to line up customers by early US LNG exporters, including Freeport LNG Development and Cheniere Energy.

From 2016 to 2019, US suppliers reached 19 long-term deals with foreign buyers, covering 24 million tonnes of LNG a year, S&P Global Platts data shows. That total excludes a deal between ExxonMobil and Qatar that amounted to a sharing deal between production partners.

“The low-price environment makes it very difficult to sign long-term deals, and the market is evolving into a more commoditised market,” said Robert Fee, Cheniere’s vice-president of international affairs and commercial development.

“Yet there is still a clear role for long-term contracts. Some buyers may see this as an opportunity to lock in low prices.”

The Trump administration has promoted LNG export deals in trade talks, with former Energy Secretary Rick Perry touting the potential of “freedom gas” and “molecules of freedom” to help Europe and Asia reduce dependence on Russian and Middle Eastern sources.

US officials have aggressively pursued LNG agreements with countries including China, India, Poland and Ukraine buy fewer concrete deals have emerged since Mr Trump took office. Three out of four non-binding LNG agreements the Trump administration announced with China subsequently fell apart, and that was before a US trade war with China disrupted American LNG flows to the country.

When he makes his first official visit to India this week, Mr Trump will be joined by Commerce Secretary Wilbur Ross and Energy Secretary Dan Brouillette, according to a senior administration official. The trip will focus on economic and energy ties between the countries.

Mr Trump will try to lock in a prospective deal publicised when Prime Minister Narendra Modi visited Houston in September.

At that time, Mr Trump touted a $US7.5bn ($11.35bn) non-binding LNG deal between fledgling US exporter Tellurian and India’s Petronet LNG.