China Adopts Henry Hub Indexation in American LNG Contracts

Several Chinese companies have signed long-term contracts to purchase liquefied natural gas indexed to the U.S. Henry Hub, despite heightened trade tensions and the recent application of specific tariffs on American hydrocarbons.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

Amid global energy market uncertainty, major Chinese companies are shifting toward an innovative pricing strategy for liquefied natural gas (LNG). These firms are opting for the U.S. benchmark price at the Henry Hub in Louisiana, seeking to diversify their long-term contracts with American trading partners. This move comes in a context where China has imposed a 15% tariff since February 2025 on LNG imported from the United States. Despite this restrictive trade environment, these new contracts highlight a desire to secure price stability for several years.

Major Contracts and Financial Terms

Recently, Guangdong Pearl River Investment Management Group (GPRIMG) finalized a 15-year agreement with ConocoPhillips. This contract includes annual deliveries of 300,000 metric tons of LNG starting in 2028, priced at 121% of the Henry Hub benchmark plus a fixed premium of approximately $4.5 per million British thermal units (MMBtu). Concurrently, Guangzhou Gas Group signed another five-year agreement with Mercuria Energy Trading. Starting in 2026, this contract will initially be indexed to the Japan Korea Marker (JKM), an Asian benchmark, switching from the second year onwards to the Henry Hub.

These agreements emerge as China, initially one of the world’s largest buyers of U.S. LNG, had ceased direct imports due to tariff barriers introduced earlier this year. Several major Chinese firms had thus begun reselling their American LNG cargoes to Europe, circumventing additional costs linked to the tariffs. Within this context, the recent signing of contracts directly tied to the Henry Hub represents a distinct strategy aimed at cautiously reintegrating trade with the United States.

Potential Impacts on the Global LNG Market

The partial shift by Chinese contracts toward an American price index could significantly influence international energy trading practices. Historically, Asian LNG contracts have been predominantly indexed to crude oil, providing a degree of stability related to petroleum markets. Diversifying to a purely gas-based reference such as the Henry Hub marks a significant evolution in Asian market contract practices, highlighting a deep structural change in pricing preferences.

Moreover, this choice could impact the competitiveness of other global LNG producers, notably Russia, Australia, and Qatar, who traditionally supply the Chinese market. These producers may now need to adjust their pricing strategies to remain competitive against this new American benchmark. This situation underscores a substantial shift in commercial dynamics, potentially paving the way for increased competition among major global exporters.

An Italian appeal court has approved the extradition to Germany of a former Ukrainian commander suspected of coordinating the 2022 sabotage of the Nord Stream gas pipeline, a decision now challenged in cassation.
QatarEnergy has acquired a 40% stake in the North Rafah offshore exploration block, located off Egypt’s Mediterranean coast, strengthening its presence in the region in partnership with Italian group Eni.
The U.S. Department of Energy has given final approval to the CP2 LNG project, authorising liquefied natural gas exports to countries without free trade agreements.
LNG Energy Group finalised a court-approved reorganisation agreement in Colombia and settled a major debt through asset transfer, while continuing its operational and financial recovery plan.
Daniel Chapo is visiting the United States to encourage ExxonMobil to commit to a major investment in Rovuma LNG, a strategic gas project for Mozambique as TotalEnergies resumes its suspended operations.
Baker Hughes will expand its coiled tubing drilling fleet from four to ten units in Saudi Arabia’s gas fields under a multi-year agreement with Aramco, including operational management and underbalanced drilling services.
Tokyo Gas commits to one million tonnes per annum of liquefied natural gas under the Alaska LNG project, boosting Glenfarne’s commercial momentum after five agreements signed in seven months.
Indonesia Energy Corporation partners with Aquila Energia to develop two pilot projects combining solar and natural gas to power data centres in Brazil, under a non-binding framework supported by both governments.
A former Ukrainian soldier accused of taking part in the 2022 sabotage of the Nord Stream pipeline is at the centre of a contested extradition process between Italy and Germany, revived by a ruling from Italy’s Court of Cassation.
Venezuela demands full financial compensation for any gas exports from the offshore Dragon field, reactivated following U.S. authorisation granted to Trinidad and Tobago.
Vistra Corp. finalises the purchase of seven natural gas power plants totalling 2.6 gigawatts, strengthening its presence in key US electricity markets.
Tidewater Midstream and Infrastructure has finalised the sale of its non-core Sylvan Lake site to Parallax Energy Operating for $5.5mn, with limited impact on its 2025 results.
U.S. gas deliveries to Mexico reached 7.5 billion cubic feet per day in May, driven by rising demand in the power sector and new cross-border interconnections.
The Algerian national company has restarted a key liquefaction unit in Skikda, strengthening its export capacity amid massive investment in the gas sector.
Doha and Washington warn Brussels about the consequences of EU sustainability requirements on liquefied natural gas exports, as the continent’s energy security remains under pressure.
The Volans-1X exploration well revealed a 26-metre productive zone in the Orange Basin, marking another hydrocarbon find for Azule Energy partners in 2025.
Faced with the absence of commercially viable results on the Guercif permit, Predator Oil & Gas has initiated a sale process while continuing technical evaluation of the gas potential.
According to the Oxford Institute for Energy Studies, a stable gas price of $6/MMBtu would boost global demand by 60 billion m³ in the short term and 120 billion m³ by 2035, mainly driven by Asia.
Kazakhstan’s Karachaganak gas field has reduced output by nearly one-third following an incident at a key Russian gas processing plant targeted by a Ukrainian drone strike.
Kinetiko Energy reports production levels above economic thresholds at two Mpumalanga wells, strengthening the technical viability and development potential of its liquefied natural gas project.

All the latest energy news, all the time

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.