China needs it, the US has it, but why might a trade war energy deal not be the easy win it appears to be?

The US will soon be a net exporter of energy, while China is the world’s biggest importer, suggesting energy would be low-hanging fruit in a trade war deal

However, issues over energy security and market access complicate the dynamic, with China keen to maintain control over its domestic market

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As part of any trade war deal, the US has been keen to attain better access to China’s lucrative energy market for its companies. Photo: Cheniere Energy

Published: 12:00am, 30 May 2019Updated: 8:44am, 31 May 2019

In the second in a series on the trade war, we look at why China’s need for energy security makes a deal with the US on energy more complicated than it may seem.

On paper, a healthy energy trading relationship between China and the United States would be mutually beneficial. China is the world’s largest energy importer, while the US is, over the next year, poised to become a net exporter.

These simple facts have led many to suggest that a deal on energy trade would be low-hanging fruit in otherwise testing negotiations to strike a wider accord to end the trade war. But, as has been the case with many elements of the prolonged trade talks, things are not as simple as they seem.

While both nations were highly dependent on foreign energy a decade ago, their fortunes have since diverged markedly.

A worker cycles inside China National Petroleum Corporation’s Lanzhou Chemical Industry Company. Photo: Reuters

Advancements in drilling technology allowed the US to tap previously inaccessible shale rock formations, which saw its high dependence on foreign petroleum drop to near self-sufficiency over the past decade.

The US has subsequently enjoyed an energy boom, thanks largely to these huge stores of shale oil and gas. So vast are the discoveries, according to International Energy Agency forecasts, that the US may surpass Russia and Saudi Arabia as the largest crude oil exporter by 2024.