CNOOC Limited CEO announced that liquefied natural gas (LNG) will be contributing significantly to trade between the United States and China, once tensions between the two economies are settled.
After negotiating for months, both nations have successfully managed to fix maximum hurdles on their way to sign the final trade accord. Once signed, Beijing is likely to import significant LNG volumes from Washington. This is because China has been investing considerably in its LNG import facilities, owing to mounting demand for clean energy.
The trade agreement is likely to benefit CNOOC, as the company has invested the most in LNG terminals in China. The possible consummation of the final trade accord may also lead to a 20-year LNG supply deal between China Petroleum & Chemical Corporation SNP and Cheniere Energy Inc LNG, per media reports.
Investors should take note that currently China is the second largest LNG importer globally. Moreover, LNG constituted 60% of total natural gas volumes imported by China in 2018, according to CNOOC. In fact, to significantly streamline energy mix, Beijing is reportedly taking bold steps to double its import of LNG volumes by 2025.
Overall, the United States is well positioned to serve the massive LNG demand of China, thanks to the Shale Revolution. Owing to hydraulic fracturing and horizontal drilling technologies, the shale plays in the United States have been producing abundant natural gas, thereby positioning the nation among the largest natural gas exporters in the world.
Zacks Rank & Stock to Consider
Based in Central, Hong Kong, CNOOC currently carries a Zacks Rank #2 (Buy). Another prospective stock in the energy space is Antero Resources Corporation AR, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Resources is likely to see earnings growth of 20% over the next five years.
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