China Sign LNG Deal With The UAE Amid US Trade War

China agreed on April 21 to a term deal to buy liquefied natural gas (LNG) from the United Arab Emirates (UAE).

The LNG deal occurred amid China’s trade war with the United States. In early February, following US President Donald Trump’s first round of tariffs, China imposed a 15% tariff on US LNG imports.

As a result, Chinese buyers were already halting US LNG imports with the 15% tariff. According to Kpler and the London Stock Exchange Group data, China did not import any LNG from the US in March.

In 2024, the US accounted for about 5% of China’s LNG imports. The US is the world’s largest LNG exporter, exporting 11.9 billion cubic feet per day (Bcf/d) of LNG in 2024. China is the world’s largest LNG importer.

Therefore, the tariff dispute has pushed China to divert from US-sourced LNG as retaliatory tariffs have increased import costs.

Overview of the China-UAE LNG Deal

The cornerstone of the China-UAE LNG deal involves partnerships between three Chinese energy companies — CNOOC, ENN Natural Gas, and Zhenhua Oil — and the UAE’s national energy giant, Abu Dhabi National Oil Company (ADNOC).

CNOOC Gas & Power – ADNOC LNG Deal

• Parties: China National Offshore Oil Corporation (CNOOC) & ADNOC
• Volume: 500,000 metric tons of LNG per year
• Duration: 5 years (starting in 2026)
• Purpose: Securing stable LNG supplies outside the US market.

ENN Natural Gas – ADNOC LNG Deal

• Parties: ENN Natural Gas & ADNOC
• Volume: 1 million metric tons of LNG per year
• Duration: 15 years (starting in 2028)

Zhenhua Oil – ADNOC LNG Deal

• Parties: Zhenhua Oil & ADNOC
• Volume: Up to 12 cargoes per year (about 780 kt of LNG)
• Duration: 5 years (starting in 2026)

China’s LNG Demand Growth

China’s LNG market appears to be booming. According to Kpler data, the country imported 78 million tons (MT) in 2024. Imports came from Australia (34%), Qatar (24%), Malaysia (10%), Russia (9%), and the United States (6%).

In 2023, China imported 72 million tons of LNG, compared to 78.8 million tons in 2021. Therefore, China’s LNG demand is between 70 and 79 million tons annually. However, it is expected to reach about 100+ million tons (MT) by 2030.

China’s growing demand for natural gas is driven by industrial demands, urban heating, and environmental reforms.

China’s LNG Deal with the UAE Amid Trade War with the United States

Since returning to the White House in January, President Trump has imposed massive tariffs on Chinese imports. In addition, the US imposed tariffs on key trading partners to reduce the US trade deficit and the ballooning US debt. Meanwhile, China has pushed back by imposing 125% tariffs on US imports.

Therefore, with rising tensions, China is increasingly looking to Middle Eastern and African partners for LNG to reduce over-reliance on US LNG.

Thus, China’s LNG deal with the UAE directly reduces its reliance on US LNG. In fact, US LNG exports to China dropped to zero as of March 2025, partly due to tit-for-tat tariffs.

China has been actively expanding deals with alternative suppliers like Qatar, Russia, and now the UAE. By securing supplies from the UAE, China reduces exposure to potential US export restrictions linked to geopolitical risks.

Besides reducing its geopolitical risk, China’s LNG deal with the UAE would enable it to gain leverage during trade talks. China can’t meet its LNG demand without US supplies. Therefore, the LNG deal with the UAE would serve as a bargaining chip in trade talks with the United States.

Furthermore, the shipping routes from the UAE to China are much quicker than those from US Gulf Coast terminals. Thus, China’s LNG deal with the UAE means lower freight costs and faster delivery times, which will improve China’s supply chain efficiency.

UAE LNG

The UAE is a leading LNG powerhouse in the Middle East. It produces LNG primarily from its large natural gas reserves. The country’s strategic location allows for easy access to global shipping routes, making it an attractive LNG source for international markets, especially in Asia and Europe.

• LNG plant:
  • Das Island: Operational
  • Ruwais LNG Project: to commence in 2028
• Operators:
  • Das Island: ADNOC
  • Ruwais LNG: ADNOC (60%), Shell (10%), TotalEnergies (10%), BP (10%), Mitsui (10%).
• Production Capacity:
  • Das Island: 6 million metric tons per annum of LNG production
  • Ruwais: 9.6 million metric tons per annum.
• Proven Gas Reserves: 290 Trillion Cubic Feet

Geopolitical and Market Impacts

The China-UAE LNG deal is more than just a commercial deal; it also has a significant geopolitical impact.

Global LNG trade is gradually becoming regionally segmented. While China turns to Africa, Russia, and the Middle East for supplies, Europe relies more on the US and Norway.

China’s LNG deal with the UAE signalled moves to reduce reliance on US supplies, which could potentially cut into America’s future LNG export earnings. US LNG exporters like Cheniere Energy had relied on China as a significant growth market. Thus, US LNG companies would have to compete harder for market share in Japan, South Korea, and Europe.

The LNG deal presents a significant opportunity for Yuan-Dirham LNG Trade. In March 2023, China and French energy giant TotalEnergies completed China’s first yuan-settled LNG trade through the Chinese energy trading centre Shanghai Petroleum and Natural Gas Exchange (SHPGX).

According to SHPGX, TotalEnergies supplied CNOOC with about 65,000 tons of LNG imported from the UAE. The transaction was settled using the Chinese currency.

In November 2023, China and the UAE renewed their five-year currency swap deal, which started in 2012. In March 2023, the two sides made the first-ever purchase of LNG in Yuan. While the UAE remains a US security partner (it hosts US troops), it is also deepening economic ties with China.

Thus, the LNG deal offers a broader opportunity for China-UAE trade using local currencies instead of the US Dollar. With the UAE already a BRICS member, it further cements China-UAE ties.

The LNG deal deepens China’s overall influence in the Gulf region, which has been under strong US strategic, economic, and military influence.

The growing economic and trade ties between China and the Middle East, especially the Gulf Cooperation Council states, occurred gradually.

For China, the Belt and Road Initiative and its energy needs pushed it towards the Gulf Cooperation Council. Apart from infrastructure developments, the BRI Action Plan also emphasises the internationalisation of the Yuan and cross-border payment agreements.

As such, China launched the Yuan Cross-Border Interbank Payment System to provide a reliable platform for cross-border yuan settlement. 

Apart from the UAE, China has currency swap deals with Saudi Arabia and Qatar. Saudi companies were listed on the Hong Kong Stock Exchange.

In addition, China has signed cross-border trade settlement arrangements with all six Gulf Cooperation Council members.

For the GCC members, as key oil and LNG exporters to China, China is a significant market for energy exports. 

China’s long-term partnerships with the UAE could set a precedent for deeper Gulf-China energy ties.