Image Source: Cheniere Energy

China's threat to slap tariffs on U.S. natural gas exports is injecting uncertainty into a construction boom for the multibillion dollar facilities that ship American shale gas around the world. By the end of next year, six facilities in the United States are expected to be exporting liquefied natural gas. During that same period, several companies are slated to decide whether they'll move forward with another wave of American LNG export terminals. Many of those projects are looking to line up buyers in China, which is poised to surpass Japan as the world's largest consumer of LNG, a form of natural gas super-chilled to its liquid form for export by sea. But Beijing cast doubt on the prospect of signing deals with the developers last week when it threatened to slap a 25-percent tariff on U.S. goods including LNG, firing back as the Trump administration mulled hiking tariffs on $200 billion of Chinese goods.

China is targeting Trump's energy dominance agenda. They want to bring the U.S. back to the negotiating table. Hugo Brennan Verisk Maplecroft Asia analyst

To be sure, tariffs would have to remain in place for months or years to spoil the dealmaking, according to analysts. But the threat comes at a time when industry watchers say some of the terminals are already at risk of being shelved because there's too little capital available to finance so many projects. "Even ignoring the politics with China, there are too many of these early stage projects," said Pavel Molchanov, energy analyst at Raymond James. "The vast majority of them will never get built, no matter what happens with China, because the scale of the demand is disconnected from the excessive, absurd number of early-stage players that want to build an LNG plant." The U.S. projects chasing capital include a slate of brand new terminals, most of which would be built on the U.S. Gulf Coast. It also encompasses expansions of first-wave terminals operated by LNG pioneer Cheniere Energy, which signed the first long-term contract with a Chinese company earlier this year. At the time, Cheniere CEO Jack Fusco said the contract to sell LNG to China National Petroleum Corporation would support future expansion at its terminal in Corpus Christi, Texas.