As a defense against President Trump's trade war, Asia's wealthiest man, Mukesh Ambani, is rushing to purchase American ethane gas.

Ambani's wager places India as a major purchaser of US energy, perhaps reducing tensions over India's $43 billion trade surplus with the US, given Trump's threat of 26 percent ‘reciprocal tariffs’ on Indian imports by July 9.

This approach is now anchored by his fleet of six specialist ethane tankers.

Every year, 1.6 million tons of shale are imported by his company Reliance Industries from US shale resources and transported to companies in Gujarat in enormous tankers.

This inexpensive gas saves $450 million a year by replacing more expensive oil-based naphtha in the production of polymers.

To remain ahead of the competition, India's state-owned GAIL is also attempting to imitate Ambani's strategies.

Following government measures that reduced its natural gas supply and impacted revenues, it recently looked for 20-year contracts for US ethane tankers.

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Similar to Reliance, GAIL plans to replace naphtha with ethane by pipelining it to its chemical facilities. Since ethane makes more plastic per tonne and is half as expensive as naphtha, the change is imperative.

Companies like GAIL are believed to be on the look out for US alternatives since even Qatar now costs more for ethane in gas sold to India.

 

As shale gas floods international markets, analysts refer to this as a 'permanent shift'.

Ambani's action is timely given Trump's trade conflicts. China used to purchase the majority of US ethane, but Trump's tariffs and "decoupling" policies have put a halt to negotiations. Although it cannot match China's scale, India is now able to take use of this surplus.

Trump's rage over "massive tariffs" threatens Apple's proposal to manufacture iPhones in India, highlighting New Delhi's delicate position. India wants to avoid tariffs on textiles and automobiles by increasing US energy purchases. Reliance's new ships and pipeline network bolster its position as a "pressure valve" in trade negotiations between the US and India.

Trump and Ambani have a long history together. Trump welcomed the family at his pre-inauguration banquet, while Ivanka attended the $600 million wedding of Ambani's son. Their financial interests now coincide: Ambani is looking for inexpensive raw materials, while Trump wants foreign buyers for US shale gas.

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Experts caution that India's oil refineries may become outdated as Reliance places an order for three more ethane tankers.