Natural gas imports accounted for 40% of Chinese gas use , and LNG made up over 50% of imports
China surpassed South Korea to become the world’s second-largest importer of liquefied natural gas (LNG) in 2017, according to data from IHS Markit and official Chinese government statistics.
Chinese imports of LNG averaged 5 billion cubic feet per day (Bcf/d) in 2017, exceeded only by Japanese imports of 11 Bcf/d, according to the U.S. Energy Information Administration.
Imports of LNG by China, driven by government policies designed to reduce air pollution, increased by 1.6 Bcf/d (46%) in 2017, with monthly imports reaching 7.8 Bcf/d in Dec.
China’s imports of natural gas have grown to meet increasing domestic natural gas consumption, which has been primarily driven by environmental policies to transition away from coal-fired electricity generation.
The Chinese government has also implemented policies to convert several million residential households in China’s northern provinces, which traditionally rely on coal heating in the winter, to use natural gas-fired boilers instead.
Natural gas storage capacity in China is relatively limited, estimated at just 3% of total natural gas consumption. China’s seasonal peak demand is met primarily by natural gas imports, either by pipeline from Central Asia or by shipments of LNG.
Despite increases in the country’s domestic production and in pipeline imports in 2017, natural gas shortages in northern China led to record levels of LNG imports during the 2017 winter.
Overall, natural gas imports accounted for 40% of China’s 2017 natural gas supply, and LNG made up more than half of those imports.
China has 17 LNG import terminals at 14 ports along its coastline, with a combined regasification capacity of 7.4 Bcf/d.
Annual utilization rates at LNG import terminals averaged about 50% from 2013 through 2016, but the rate increased to 69% in 2017.
Colder-than-normal winter weather increased natural gas demand and led LNG import terminals in the northern and central coastal regions to exceed nameplate capacity by 30% and 20%, respectively, in Dec. 2017.
U.S. LNG exports to China increased significantly last year, from 17.2 Bcf in 2016 to 103 Bcf in 2017. China accounted for nearly 15% of U.S. LNG exports in 2017, behind only Mexico and South Korea.
In Nov. 2017, the United States and China signed several preliminary agreements for U.S. LNG exports to the country, including exports from Sabine Pass on the Gulf Coast of Louisiana, the fully approved Delfin LNG offshore export project off Louisiana’s coast, and the proposed Alaska LNG project.
In Feb. 2018, Cheniere Energy and the China National Petroleum Corporation signed two long-term contracts for LNG from Sabine Pass and new LNG facility under construction near Corpus Christi, Texas.
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