SINGAPORE: China’s imports of liquefied natural gas will likely grow 10 per cent to new highs this year as companies scoop up cheap supplies to cover increasing industrial use and robust residential demand.
With its total natural gas use likely expanding at 4-6 per cent this year, China is the only major bright spot on the world gas market, where demand is set to fall by about 4 per cent as the global economy contracts due to coronavirus lockdowns, report agencies.LNG imports are set to hit a record 65-67 million tonnes this year, analysts and Chinese traders estimate, a tenth more than 2019’s total and at a growth rate that could see China overtake Japan as the world’s top buyer by 2022.
“After taking a brief hit earlier this year due to the COVID-19 pandemic, China’s gas demand recovered faster than expected, driven mostly by the industrial sector that has recovered to 2019 levels since May, ” said Alicia Wee, analyst at FGE.
Companies booked more super-chilled gas from Qatar, Russia and Australia, taking advantage of record-low prices LNG-AS earlier in the year as demand sagged elsewhere.
To accommodate higher LNG imports, top gas importer PetroChina reduced costlier pipeline supplies from central Asia, mainly Kazakhstan, using contract tolerances, said a Beijing-based PetroChina official.
“(Fourth-quarter)imports will remain robust...as LNG is both more competitive and flexible versus pipeline gas, despite a recent spot price spike,” Lu Xiao, senior analyst at IHS Markit.
January-August imports of LNG rose 10.3 per cent over the same year-ago period to 42.2 million tonnes, while piped gas fell 7.4 per cent, Chinese customs data showed.China sees natural gas as a bridge fuel on its long journey to reach carbon neutral by 2060, and since 2016 has switched millions of homes and thousands of factories to gas from coal.
The gasification pace slowed along with the economy since 2019, but new pockets of industrial demand have emerged in manufacturing hubs like south China’s Guangdong and east China’s Shandong provinces.