Handling of energy resource, imports on rise amid move toward cleaner fuel in achieving green transition
China’s demand for liquefied natural gas is expected to rise in 2023, and use of the super-chilled fuel is forecast to pick up as additional measures have helped the economy to recover, industry experts said.
LNG imports this year are likely to surpass 70 million metric tons, 11 percent higher year-on-year, according to strategic research provider BloombergNEF. That would signify that China’s LNG demand is set to recover in 2023 as economic growth rises, it said.
Forecasts from analysts at European research firms Rystad Energy, Wood Mackenzie and Independent Commodity Intelligence Services put China’s demand between 70 million and 72 million tons in 2023, 9 to 14 percent higher than in 2022.
The LNG trade is expected to increase robustly in the near term worldwide, with continuing demand in emerging markets as they grow and industrialize, according to the BP Energy Outlook 2023. Much of this growth is driven by increasing gas demand in China, India and other Asian nations as they move away from coal.
LNG imports are the main source for this growing use of natural gas, accounting for 65 to 75 percent of the increase in gas consumed in emerging Asian nations out to 2030, the BP outlook said.
China has become the dominant force in LNG worldwide as it works toward a green transition with what is seen as a relatively clean bridge fuel. Chinese buyers account for 40 percent of recent long-term LNG contracts among global players, according to Japan-based news provider Nikkei Asia.
Of the long-term import contracts China now has for LNG, the United States is responsible for around 25 million tons. Australia ranks second at roughly 17 million tons, while the Middle East supplies 14 million and Russia contributes about 6 million, it said.
China National Offshore Oil Corp was the nation’s top importer of LNG last year with 26.69 million tons, accounting for around 43 percent of the country’s total LNG imports.
China Petrochemical Corp, also known as Sinopec, the world’s largest refiner by volume, reached a 27-year agreement with state-owned QatarEnergy late last year to buy 4 million tons of LNG annually beginning around 2026.
“State-owned enterprises have led China’s expansion of its capacity to handle LNG, while private companies are playing an increasingly active role in building LNG terminals,” said Li Ziyue, an analyst with BloombergNEF.
Private Chinese energy company ENN Group signed a contract last year with Texas, US-based Energy Transfer to buy 2.7 million tons of LNG annually for 20 years. ENN also increased its purchasing agreement with NextDecade, also headquartered in Texas, to buy 2 million tons a year for 20 years as well.
Over 2021 and 2022, China closed long-term LNG purchasing contracts worth nearly 50 million tons a year, tripling its purchases through long-term contracts in just two years, up from the annual volume of roughly 16 million tons from 2015 through 2020, according to Rystad Energy.
Industry experts said that China’s demand for natural gas in 2022 appears to have fallen for the first time in two decades, due to weak demand from industries disrupted by pandemic controls.
While imports to China, the world’s second-largest economy, were likely to have fallen short of record 2021 levels, growth momentum across sectors is expected to be restored with employees heading back to work, according to Rystad Energy.
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