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China to become one of top LNG importers

LNG Industry,


Imports of LNG to China have increased by 25% annually over the last four years, according to the latest analysis from Thomson Reuters Point Carbon.

Moreover, the last two months (December 2013 and January 2014) reveal a considerable increase in imports, up 80% from previous months. China looks to be a top LNG importer by 2018-2020, with volumes close to the current import levels for Japan. Japan, the world’s largest consumer of LNG, imported 118 billion m3 of natural gas in 2013.

Global LNG supply and demand

Thomson Reuters Point Carbon has developed three forecasts for the growth of China LNG ranging from 52 to 110 billion m3 for the year 2018. All three forecasts lead to the conclusion that China will contribute significantly to tight supply and demand balances in the global LNG market.

Several new LNG import terminals are under construction and even more are planned and have been approved. With the addition of these new terminals, Thomson Reuters Point Carbon expects LNG import capacity to reach approximately 100 billion m3/year by 2018, or even earlier.

Natural gas production

Natural gas production in China has also grown significantly over the last few years, from 28 billion m3 in 2000 to 109 billion m3 in 2012. In volume terms, China is now on a level with Norway, Western Europe’s largest gas producer.

The country’s import of gas began in 2006, growing to 52 billion m3 in 2013 with an approximately 50/50 share between LNG and piped gas. Turkmenistan supplies most of its pipeline gas, however there are ongoing discussions with Russia, and particularly Gazprom, on a large volume contract due to start in 2018. In 2013 China imported 24.7 billion m3 of natural gas, almost double the 2010 level of 12.7 billion m3.

LNG contracts

The current LNG imports are backed by long-term contracts with several LNG producers. New long-term contracts have been established with producers from Australia and Papua New Guinea, to start from 2015 and 2016. Based on these agreements, China has secured a base LNG supply of 44 billion m3/year from 2016, although LNG import growth into China may diminish if LNG becomes too expensive for sections of the Chinese gas market.

Key points

  • From 2000 till 2013, China’s gas consumption grew from 28 to 170 billion m3.
  • LNG import in 2013 was 24.7 billion m3 in natural gas terms and China now ranks above major traditional importers such as Taiwan and Spain.

Thomson Reuters forecasts

The three forecasts made by Thomson Reuters Point Carbon are:

  • All LNG import terminals will, as they are opened, start importing cargoes. Based on a utilization rate of 65%, we arrive at an LNG import forecast of 65 billion m3 in natural gas terms in 2018. In comparison, South Korea, currently the second largest LNG consumer, imported 50 billion m3 LNG in 2012.
  • The 52 billion m3 LNG import forecast for 2018 is based on IEA’s forecasts of Chinese gas consumption and production.
  • The 110 billion m3 LNG import forecast is derived from the Chinese Five Year Plan 2011-15 and extrapolations.

Thomson Reuters Point Carbon’s LNG import forecasts for China do not consider the global availability of LNG, competition for limited global LNG volumes or pricing of LNG.

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/24032014/china_set_to_become_top_lng_importer_325/


 

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