An Italian judge sentenced two defendants in a Nigerian corruption case to jail on Thursday in the first ruling on one of the oil industry’s biggest graft scandals.
Nigerian Emeka Obi and Italian Gianluca Di Nardo were found guilty of international corruption and each given four-year jail sentences, three sources with knowledge of the ruling said.
Lawyers for Obi and Di Nardo declined to comment.
The long-running case revolves around the 2011 purchase by Italian oil company Eni and Anglo-Dutch peer Royal Dutch Shell of Nigeria’s OPL 245 offshore oilfield for about $1.3 billion. Milan prosecutors allege bribes totaling around $1.1 billion were paid to win the license to explore the field which, because of disputes, has never entered into production.
The main trial - which besides Eni and Shell also involves Eni CEO Claudio Descalzi and four ex-Shell managers including former Shell Foundation Chairman Malcolm Brinded - is expected to drag on for months.
But Obi and Di Nardo, accused of being middlemen and taking illegal kickbacks, had asked for a separate fast-track trial which, under Italian law, allows sentences to be cut by a third.
Thursday’s ruling will not tie the court’s hand in the main trial.
But Barnaby Pace, anti-corruption campaigner at Global Witness, said: “This judgment will send shivers down the corporate spines of the oil industry.”
In an emailed statement, a spokeswoman for Shell said neither Obi nor Di Nardo worked on behalf of the company, adding it was waiting to see the fast-track judge’s written decision.
“Based on our review of the Prosecutor of Milan’s file and all of the information and facts available to us, we do not believe that there is a basis to convict Shell or any of its former employees of alleged offences,” it said.
Also in emailed comments, Eni reiterated it had acted correctly in the purchase of OPL 245, saying it had worked directly with the Nigerian government.
Nigeria’s OPL 245 is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at 9 billion barrels.
Eni, the biggest foreign oil producer in Africa, has been doing business in Nigeria since 1962 and last year produced 109,000 barrels of oil equivalent per day.
Shell is the biggest foreign investor in the country, producing 266,000 barrels of oil equivalent per day in 2017.
The sources said the Milan judge had ordered the seizure of $98.4 million from Obi and more than 21 million Swiss francs ($21.9 million) from Di Nardo.
Prosecutors had alleged Obi received a mandate from former Nigerian oil minister Dan Etete to find a buyer for OPL 245, collecting $114 million. Di Nardo, they said, took $24 million of that amount for putting Obi in touch with Eni.
The next hearing of the main trial involving Eni, Shell and 13 people is set for Sept. 26.
Of all sharks and rays worldwide, sawfishes – related to stingrays and manta rays – are considered to be the family at greatest risk of extinction. The long, toothed saw – which gives them their unique appearance – also makes them extremely vulnerable to entanglement in fishing nets.
Their numbers have fallen because they are caught accidentally in industrial fishing nets. In addition to that, they are targeted by some fishermen because their fins can fetch high prices.
There are five species of sawfish globally. Two can reach around seven metres in total length (including the saw), making them the third largest members of the shark and ray family.
Sawfishes were formerly common along both the west and east coasts of Africa. Until a few years ago there was no knowledge of whether they still inhabited these waters, or if populations had plummeted as they have done elsewhere.
I set about addressing this gap six years ago. Since then, I have interviewed more than 500 fishers in six different African countries. I collected information on when and where people last caught sawfishes, how they used them and what their local value was. My research showed that sawfishes are now locally extinct from many parts of West Africa, but are still encountered – at least occasionally – by fishers in Madagascar and northern Mozambique.
Working in fishing communities and engaging in the lives of fishers has provided me with some insights into how sawfishes can best be protected in countries like Madagascar, as well as an understanding of the approaches that won’t work.
In the two developed countries where sizeable sawfish populations still exist – Australia and the US – an important step in preventing further declines of these endangered species is to declare them protected under national law and to prohibit activities that threaten them. So catching and killing of sawfishes is banned.
This is an effective approach in countries with the capacity and funding to enforce such laws. But in developing countries, a different approach is needed - a “bottom-up” approach in which communities take the lead. And for that to happen, scientists need to convey the implications of their research to the people who rely directly on the natural resources around them, in relevant, easy-to-digest ways.
Sawfishes are not legally protected in most African nations. And even if they were, legislation is rarely an effective approach in countries with little or no capacity to enforce species protection laws.
In addition, fishers who catch sawfishes value them as sources of income (through the sale of their fins, meat, and occasionally other parts) and food. Artisanal fishers along the coasts of Madagascar and Mozambique are some of the poorest communities in these countries; they often live in remote rural areas and have few alternatives to fishing as a way to make a living.
Unless fishers are provided with livelihood alternatives, any efforts to prevent sawfish mortality could be considered to compromise their immediate wellbeing. Fishers are unlikely to sign up to an approach which will mean more hardship for them.
What can be done
We need to reduce the number of sawfishes being caught in fisheries, and ensure that their habitats, especially coastal waters and mangroves, are protected. These two steps would have far-reaching and long-term benefits.
But in my view, the only way to achieve these goals is by encouraging communities to become caretakers of the natural resources they rely on for their own survival. And to achieve this, they first need to understand why these goals should matter to them.
The right educational tools can be used to explain that freshwater and marine ecosystems, fished responsibly, provide food and saleable goods, while mangroves protect coastal communities from storm surge and erosion. The communities themselves can then understand the trade-off between short-term, personal gain and longer-term, communal value, and can choose which path they wish to take.
My insight from working in fishing communities is that as a scientist, I have a duty to explain my findings, their implications and encourage communities to engage in developing strategies to address conservation issues. This benefits the communities as well as the species and habitats that need protection.
To this end I developed a short educational film and a story book. These both aim to convey the importance of sharks and sawfishes as part of healthy marine and freshwater ecosystems. They also point out the many ways in which communities stand to benefit from the sustainable use of sawfishes and other aquatic resources.
The film was made in multiple languages for both Mozambican and Malagasy audiences to ensure it could reach the widest possible audience. These resources have also given audiences beyond Africa insight into the lives of fisherfolk and the specific challenges facing sawfish conservation in these places.
The experience has taught me that we may be missing opportunities to use stories built around our work, to inspire interest and change where it is most needed: at community level. Armed with the right knowledge and understanding of why protecting mangroves, coastal waters and their inhabitants is important, communities can be the caretakers of these natural resources, both for their own benefit and for the planet’s.
I think about the future of my continent in terms of three questions: Are Africans healthy? Do they have access to a good education? And do they have opportunities to apply their skills?
Millions more Africans have been able to answer yes to these questions in recent years. But there’s an elephant in the room. One of the keys to keeping this progress going is slowing down the rapid rates of population growth in parts of the continent. But population issues are so difficult to talk about that the development community has been ignoring them for years.
Population growth is a controversial topic because, in the not-too-distant past, some countries tried to control population growth with abusive, coercive policies, including forced sterilization. Now, human rights are again at the centre of the discussion about family planning, where they belong. But as part of repairing the wounds created by this history, population was removed from the development vocabulary altogether.
For the sake of Africa’s future, we should bring it back. Based on current trends, Africa as a whole is projected to double in size by 2050. Between 2050 and 2100, according to the United Nations, it could almost double again. In that case, the continent would have to quadruple its efforts just to maintain the current level of investment in health and education, which is too low already.
But if the rate of population growth slows down there will be more resources to invest in each African’s health, education, and opportunity – in other words, in a good life.
To be very clear: the goal of family planning programmes is not to hit population targets; on the contrary, it’s to empower women so that they can exercise their fundamental right to choose the number of children they will have, when, and with whom. Fortunately, empowering couples to make decisions about their lives also improves Africa’s future by changing the population growth scenario across the continent.
Some relatively simple future scenarios for sub-Saharan Africa have been modelled to consider how various family planning-related investments might affect population growth. These have been built using data from the Track20 Project. The project monitors global progress in extending access to modern contraceptives to additional 120 million women in the world’s 69 poorest countries by 2020.
Let’s examine the data.
Wanted fertility: the black line represents sub-Saharan Africa’s population to 2100 based on estimates by the United Nations Population Division. The blue line represents its population to 2100 if every woman had only the number of children she wanted. Currently, women in the region have an average of 0.7 more children than they want. If that number went down to zero over the next five years, the population in 2100 could change by 30%.
Education: another link between empowerment and population growth is the transformative impact of secondary education for girls. Educated girls tend to work more, earn more, expand their horizons, marry and start having children later, have fewer children, and invest more in each child. Their children, in turn, tend to follow similar patterns, so the effect of graduating one girl sustains itself for generations. Though the impact of education is sweeping, our model looks at just one narrow aspect of it: a shift in the age at which women give birth to their first child.
The pink line represents sub-Saharan Africa’s population if every woman’s first birth were delayed by an average of approximately two years. The average age at first birth for women in Africa is significantly lower than in any other region. Currently, it is 20 or younger in half of African countries. This scenario doesn’t have anything to do with women having fewer children. It just has to do with when they start having them.
Consider this thought experiment. If every woman started having children at age 15, then in 60 years you’d have four generations (60/15=4). But if every woman started having children at age 20, then in 60 years you’d have three generations (60/20=3). Even if those women had the same number of children in each generation, the total population would be one-quarter smaller in the latter scenario. To be conservative, we assumed a less substantial delay in our model. Still, it changes the projected population by nearly 10%.
All well-meaning Africans will support sending girls to school and giving them access to information about family planning and contraceptives when they ask for them.
And I hope we will stop shying away from also pointing out that empowered women make millions of individual decisions that add up to a better demographic situation for themselves, for their children, and for Africa.
A version of this article was first published in the Goalkeepers Report
South Africa’s Constitutional Court has passed down a judgment that makes it legal for adults to cultivate and smoke marijuana in their homes.
The court – the country’s highest – ruled that the right to privacy was violated by prohibiting the possession, purchase or cultivation of cannabis for personal consumption by an adult in a private dwelling.
The case was pursued by various parties, including a Cape Town lawyer, Gareth Prince, who is a practising Rastafarian. It was opposed by, among others, the country’s ministers of Justice and Constitutional Development, Police and Health; the country’s National Director of Public Prosecutions and the NGO Doctors for Life International.
The Constitutional Court’s judgment is to be applauded for doing away with the moralistic and paternalistic assumption that marijuana use by adults in private is always wrong and unhealthy. South Africa joins a number of countries that have taken a similar step, among them Canada and Portugal.
But there are still lots of uncertainties that need to be cleared up before South Africans can use marijuana without fear of prosecution. One of these is that the country’s laws will have to be brought into line with the judgment.
What the court found
In making its ruling, the Constitutional Court considered several issues. These included privacy, health concerns and the status quo in other parts of the world.
Delivering the unanimous judgment, Deputy Chief Justice Raymond Zondo stated that “the right to privacy entitles an adult person to use or cultivate or possess cannabis in private for his or her personal consumption”. And, he added,
to the extent that the impugned provisions criminalise such cultivation, possession or use of cannabis, they limit the right to privacy.
The court also examined the medical evidence that was used when the case was first brought to a lower court – the Western Cape High Court – as well as evidence from a 2002 case about the religious use of marijuana. It found no persuasive medical evidence that dagga in small amounts was harmful to users, particularly compared to the harm resulting from use of alcohol. Nor was there proof that marijuana use caused violent or aggressive behaviour or that its use led to the use of more potent or dangerous drugs.
The Constitutional Court noted that the personal consumption of small quantities of marijuana had been decriminalised or legalised in many other democratic countries.
The State failed to prove that the existing limitation of privacy was reasonable and justifiable. The relevant legal provisions that criminalise personal, private use of dagga by adults were declared unconstitutional and invalid. That order was suspended for 24 months. This will give parliament time to rectify the constitutional defects.
In the interim, the court ordered, adults who use, possess or cultivate cannabis in private for their own personal consumption are not guilty of contravening these provisions.
The personal consumption exception has been widely celebrated. But it raises various practical difficulties.
First, it’s less than clear under what circumstances the personal consumption exception will apply. According to the Constitutional Court, police officers will have to determine this on a case by case basis. To do so, they’ll need to consider factors such as the quantity of cannabis in the person’s possession and whether they can give a satisfactory account of their possession.
Uncertainty relating to how the exception is to be enforced in practice is problematic. It may even mean that the exception violates the so-called principle of fair warning. This rule requires criminal law provisions to be clearly formulated so those subject to them know ahead of time what they may and may not do.
Second, while the Constitutional Court judgment confirms the Western Cape High Court’s findings in many respects, it also differs in important ways. Significantly, the Constitutional Court held that there was no persuasive reason for the High Court to confine its declaration of invalidity to marijuana use in a home or private dwelling.
The Constitutional Court envisages instead that, provided dagga is used “in private and not in public”, it is protected by the right to privacy, even if the adult in question is not at home or in a private dwelling. It uses the example of someone who has cannabis in their pocket for private consumption, and then steps outside their home or dwelling. Provided the cannabis remains in their pocket and is for personal use, it still falls within the constitutional protection.
This seemingly broadens the exception proposed by the High Court. But once again, it remains to be seen how the courts will interpret the distinction between public and private use in practice.
Another aspect of the High Court judgment the Constitutional Court refused to confirm relates to the order declaring that provisions prohibiting the purchase of cannabis were invalid. The Constitutional Court argued that allowing people to purchase marijuana would amount to sanctioning dealing in cannabis.
This aspect of the judgment raises a legitimate practical concern: how is an adult user of cannabis supposed to acquire the marijuana they’re allowed to use in private if they don’t buy it from a dealer of some sort (which the Constitutional Court explicitly says is illegal)?
The user could grow their own. But they would need to obtain the seeds or buy them from someone else – who is, by definition, a dealer. The judgment’s implication seems to be that to exercise one’s (constitutionally-protected) right to use marijuana in private, one must inevitably act illegally since any purchase of marijuana and related products makes one an accomplice to dealing in cannabis.
A total of 22.4 million smartphones were shipped in Africa during the second quarter of this year (Q2 2018), according to the latest insights from International Data Corporation (IDC).
The global technology research and consulting firm's Quarterly Mobile Phone Tracker shows that Africa's smartphone shipments increased 9.8% quarter on quarter (QoQ) and 6.0% year on year (YoY) in Q2 2018.
The market's buoyant performance was spurred by the growing popularity of low-end to mid-range devices. Transsion brands continued to lead the continent's smartphone space in Q2 2018, accounting 35.4% of shipments. Samsung followed in second place with 23.2% share.
By contrast, the feature phone market was down 1.1% QoQ and 5.8% YoY in Q2 2018, but – with shipments totaling 31.4 million units – these devices still constitute a 58.3% share of Africa's overall mobile phone market as they cater to the needs of the continent's huge low-income population (mainly in rural areas) by providing basic mobile communications that are priced very competitively. Telco and Itel continued to lead feature phone category in Q2 2018 with a combined unit share of 59.9%, followed in third place by HMD on 9.0%.
Looking at the overall picture, the region's combined mobile phone market totaled 53.8 million units in Q2 2018, with shipments up 3.2% QoQ but down 1.2% YoY. The continent's two biggest markets – Nigeria and South Africa – saw a marked improvement in the performance of their overall mobile phone markets, posting YoY growth of 13.0% and 25.0%, respectively.
"The Nigerian economy remains stable and has begun to show signs of steady improvement in terms of consumer demand for mobile phones," says Arnold Ponela, a research analyst at IDC. "The country saw smartphone shipments of 2.7 million units in Q2 2018, up 15.8% YoY, with strong marketing support from telecom operators for most brands proving instrumental. However, ongoing currency issues and falling consumer purchasing power suggest Nigeria is not set for a sustained surge in smartphone shipments."
South Africa remains the continent's most developed telecommunications market, with smartphone shipments up 17.4% YoY in Q2 2018 to total 3.4 million units. "Numerous new entrants to the South African market are now offering affordable smartphones that boast very similar features to the leading brands," says Ponela. "As such, we expect the country's migration away from feature phones to continue at a progressive pace. This transition from feature phones to smartphones is reflected by the fact that the market continues to be dominated by low-end to mid-range devices priced below $150."
IDC's research shows that 4G LTE networks are spreading their reach in Africa, with shipments of 4G LTE devices increasing 11.8% QoQ in Q2 2018 to constitute 62.6% of the smartphone market. "Despite a drop in the prices of entry-level 4G phones, 2G and 3G mobile devices remain far more economical, making it difficult for operators to migrate clients over to newer technologies," says Ramazan Yavuz, a research manager at IDC. "Price sensitivity means that many African consumers prefer to stick with 3G phones, and this is likely to continue until 4G devices fall to a price point where they are affordable to a much larger segment of the continent's consumer base."
Looking ahead, IDC expects Africa's overall mobile phone market to grow 2.6% QoQ in Q3 2018, with overall shipments to increase slightly through 2018, leading to YoY growth of 0.4% for the year as a whole. "IDC predicts that 5G phones will reach the market in 2020, when rollouts of 5G networks will start in select African countries," says Yavuz. "However, demand for feature phones is unlikely to be impacted significantly as these devices will continue to serve a purpose in areas with no LTE coverage."
To deploy global investment on a significant scale Africa needs to develop the domestic conditions to absorb the much higher levels of global real estate investment currently considering Africa.
Typically, African real estate accounts for around 0.5% of large global funds’ commitment. That said, most of the global real estate funds that have invested in Africa, have sustained reasonable returns at a portfolio level over the last two decades. This has meant that most have stayed and that most have also either maintained or increased their allocation over the years. “This has built familiarity with – and confidence in - the continent,” says Adeniyi Adeleye, Executive Real Estate, Africa Regions, for Standard Bank.
The next big step is to increase the level at which these global funds’ commit to the continent.
The biggest challenge to achieving this is not so much global appetite or confidence but rather, “the ability of African markets to deploy or sustainably absorb this capital,” explains Mr. Adeleye.
Most of the continent’s leading markets have fundamental real estate demand and supply imbalances meaning that they present a largely attractive long-term investment outlook. As such, demand for real estate investment opportunities has remained consistent in most of Africa’s larger markets despite commodity price induced volatility challenges.
“Despite macro-challenges, most investors who made a commitment to the continent over the last two decades have stayed, managing volatility by seeking to evolve from short-term to more permanent real estate investment structures,” says Mr. Adeleye.
Standard Bank has supported significant evolution in the funding of real estate development on the continent. Private equity seeking alpha during the heady pre-economic crisis days appears to be giving way to longer-term funding structures.
“Private real estate funds seeking to evolve into Real Estate Investment Trusts (REITs) aim to draw on pension funds or other sources of institutional capital, for example, and are proving to be more effective in Africa’s longer-term real estate investment cycle, which typically requires much more patient structures,” says Mr Adeleye.
Yet the scale for growth going forward is much larger.
Encouragingly, policy and market conditions on the ground in Africa are shifting in the right direction. One of the keys to increasing investment in African real estate is to unlock capital in local markets. Even though some of the larger markets on the continent have regulatory or structural constraints that limit investments to unlisted real estate securities, “real estate investment, with its long and stable return profiles, still represents a fantastic opportunity to deploy local savings for broader investment and economic growth,” explains Mr. Adeleye.
Financing real estate investment requires low and predictable interest rates. In many African jurisdictions, local interest rates have been both high and volatile. This has meant that, traditionally, African real estate investment has focused on top end, global quality, opportunities that will attract hard currency funding. Today, however, leading African markets are rapidly developing the road, rail and digital telecommunications infrastructures linking their economies to the global economy. The industrial, retail and service sectors that these infrastructure ecosystems enable is making middle and lower end real estate opportunities more attractive to investors.
In short, “as African markets develop rational globally-linked and market-relevant infrastructure, real estate investors have to fund fewer of the ancillary infrastructure (roads, power, services) that have historically made middle and lower end opportunities unattractive in Africa,” says Mr. Adeleye.
Africa’s heavy focus on backward processing in agriculture (the continent’s biggest sector and traditional mainstay) also represents a significant opportunity for real estate investment – on two fronts. Firstly, the physical infrastructure required to develop a beneficiated agricultural export sector presents a real estate investment opportunity in its own right. Secondly, and arguably more importantly, “exporting beneficiated goods will limit the imported inflation endemic to raw commodity exporters,” explains Mr. Adeleye.
“If interest rates in African markets can be sustainably brought within the 10% to 14% range, we’ll see an explosion of middle and lower end real estate opportunities as these suddenly become justifiable – to both global and local investors,” he adds.
China’s heavy investment in African infrastructure at the government to government level as well as private investment in businesses unlocking the continent’s industrial and beneficiated agricultural export opportunities is deepening Africa’s ability attract and deploy much higher levels of both global and local real estate investment.
Standard Bank combines in-country presence and insight, a multi-jurisdictional view and capability across 20 African markets with an established presence in all leading centres of global capital and real estate investment. “Observing, advising, managing and growing Africa’s real estate sector enables us to recognise the scale of the opportunity that awaits those markets able to create the conditions to deploy significantly higher proportions of the world’s real estate investment capital,” says Mr. Adeleye.
Ten days ago, Zimbabwe’s new Finance Minister Mthuli Ncube was talking of abolishing bond notes and launching currency reforms before the end of the year. But on Tuesday, President Emmerson Mnangagwa ruled out any such reforms.
In his address at the opening of Parliament, President Mnangagwa reaffirmed the government’s commitment to the so-called multi-currency system or dollarization “until the current negative economic fundamentals have been addressed to give credence to the introduction of the local currency”.
The economic fundamentals he listed are the familiar ones set out repeatedly in recent years by government ministers and the central bank – a” sustainable” fiscal position, foreign currency reserves equivalent to 3 to 6 months import cover ($1.4 to $2.7 billion) and “sustainable consumer and business confidence”.
As the President spoke the premium on US dollars relative to RTGS balances or electronic money stuck in the banks, hovered close to 100% while that between Zimbabwe’s ersatz currency (bond notes) and the US dollar was 88%.
The President announced that Zimbabwe has taken on another $500 million in foreign loans to bolster the balance-of-payments, seemingly confident that a country, already in what the IMF calls “debt distress” with a debt-to-GDP ratio exceeding 100%, can weather the storm.
But the track record of emerging market governments who take on the foreign currency markets is littered with failures and it is not easy to see why Zimbabwe should be any different.
The record of macroeconomic mismanagement, including under the New Dispensation since the military coup last November, is stark. Domestic debt has escalated alarmingly; the balance-of-payments gap is widening; more and more is being borrowed offshore by private as well as official entities
In the 2018 budget presented nine months ago, the former finance minister, Patrick Chinamasa, promised to cut the budget deficit from $2.5 billion, which was hugely understated at the time to $671 million this year.
But just before he left office after losing his seat in the July 31 election, Chinamasa’s ministry revealed that government spending, far from being cut, had jumped 57% in the first half of the year. The deficit for the 6 months was $1.4 billion and forecasters expect it to top 3 billion – more than 16% of GDP – in 2018, especially when the extra $300 million for the 17.5% pay rise for civil servants and the 20% hike for the military and police, is taken into account.
Such profligacy hardly inspires confidence in the fiscal consolidation promised by the president and his new cabinet.
Policymakers believe that they can maintain the fiction that the local currency – electronic balances and bond notes – really does trade at par with the US dollar. In the parallel market however, the over-valued local unit is worth less than 40 cents.
The official position, set out by Mr Mnangagwa, is that this situation can be maintained until the budget deficit has been cut and foreign reserves accumulated. But given that the country is staring down the barrel at a trade deficit of well over $2.5 billion this year – it was $1.7 billion in the first 7 months of 2018 – it is going to take a long time to build up reserves of $2 billion or more.
This is the catch-22 position in which Zimbabwe finds itself. Can it wait 2 years or more to meet President Mnangagwa’s economic fundamentals before abandoning the unsustainable dollar parity, or are the fundamentals unreachable without a competitive exchange rate?
- The Source
China set a 10 percent tariff on U.S. liquefied natural gas (LNG) imports, extending a trade dispute into energy and casting a shadow over U.S. export terminals that would propel the United States into the world's second-largest LNG seller.
Beijing on Tuesday said it would tax U.S. products worth $60 billion effective Sept. 24 in retaliation for tariffs imposed by U.S. President Donald Trump in an escalating trade war.
The rate was smaller than the 25 percent tariff China had touted earlier, which offered some relief and helped shares in listed U.S. LNG companies climb.
The tariffs undermine Trump's drive to use U.S. shale oil and natural gas to turn the United States into a global energy leader. The U.S. is on track to export over 1,000 billion cubic feet (bcf) of gas as LNG in 2018. One billion cubic feet is enough to fuel about 5 million U.S. homes for a day.
But China, which purchased about 15 percent of all U.S. LNG shipped in 2017, is now on track to buy less than 100 bcf of U.S. LNG in 2018, less than last year, according to Thomson Reuters vessel tracking and U.S. Department of Energy data.
The country has taken delivery from just four vessels since June versus 17 during the first five months of the year. Proposed U.S. export terminals, many expected to supply Chinese customers, were expected to account for 60 percent of all new LNG production coming to market by 2023, according to industry data.
LNG, which involves super-cooling natural gas so it can be transported by ship rather than pipeline, has become one of the fastest growing commodity trades as nations seek cleaner fuels.
The tariff's extension to an energy commodity much in demand in China was a worrisome sign for trade relations and for billions of dollars in proposed U.S. terminals, said trade group executives.
Including LNG "is a good indicator of how serious things have gotten between the U.S. and China on this trade issue," said Charlie Riedl, executive director of Center for Liquefied Natural Gas, a group whose members include Cheniere Energy, Chevron and Exxon Mobil.
"While we would like to see this resolved quickly, I don't see that happening right now," said Riedl, speaking by phone from a natural gas conference in Spain. The longer the dispute lasts, the less likely proposed projects will find financial backers, he said.
Analysts say the tariffs will particularly hit plans by U.S. companies, such as Cheniere Energy (LNG.A), Sempra (SRE.N) and Kinder Morgan (KMI.N), to build new terminals or expand existing ones by adding processing units.
"Some commercial agreements may be on hold until there is more visibility," said Stacey Morris, director of energy research at Alerian Indexes.
Cheniere, Kinder Morgan and Dominion Energy declined to comment.