The US Department of Defense (DoD) has added Chinese shipping giants COSCO Shipping Corp, plus two of its subsidiaries, and China National Offshore Oil Corp’s (CNOOC) trading arm to the list of companies linked to China’s military involvement.
This step formalises the designation in an effort to discourage US involvement with the companies on the annual list, which was published in the US Federal Register yesterday.
The markets was still assessing the impact on oil and gas trading, plus shipping, plus the situation ahead of President Elect Donald Trump’s new administration.
This blacklist was described as different from the Specially Designated Nationals list compiled by the US Department of Treasury’s Office of Foreign Asserts Control that previously impacted oil and gas/LNG trade flows or shipping companies, by penalising violation of sanctions on Iran or Russia.
A DoD blacklist targets companies that are deemed to impact national US security and likely to disrupt business. It could also result in higher operational costs, compliance issues and reputational damage, S&P Global explained.
CNOOC contract with Venture Global under scrutiny
The list includes CNOOC subsidiaries, CNOOC China, CNOOC International Trading and COSCO subsdiaries, COSCO Shipping (North America) and COSCO Shipping Finance, as well as the main state-owned companies.
CBOOC is one of the world’s largest oil traders while the company’s Gas & Power affiliate handles LNG trading. It has negotiated two term sales and purchase (SPA) contracts with US exporter Venture Global – a 20-year FOB contract for the supply of 2 million tonnes of LNG per year from Plaquemines and a three year 500,000 tonnes per annum FOB contract from Calcasieu Pass. This contract has now come under regulatory scrutiny, adding a supply risk to Chinese LNG importers, industry and power generators further downstream on the gas value chain.
