September 28, 2020
What China’s Doing About Their Increasing Gas and LNG Demand

What China’s Doing About Their Increasing Gas and LNG Demand

RefComm Global Virtual Conf

Did you know that China was set to become the world’s top importer of natural gas last year? This was because of its increased dependency on LNG and decreased need for coal. In a report compiled by the International Energy Agency called ‘Gas 2018’, China’s demand for gas and LNG was rising.

The Statistics

The IEA found that the natural gas demand of China is set to rise by almost 60% in the current year all the way up till 2023. Their research signified that the rise will constitute of 376 billion cubic meters (bcm), which will also include rises in imports of liquefied natural gas by 2023 from 51 bcm all the way up to 93 bcm in 2023.

LNG, which is a super-chilled gas in a liquid form that can be easily transported all over the globe, is an integral part of China’s purchases. These purchases are set to rise from 391 bcm last year to about 505 bcm in 2023.

Why Can’t China Meet Gas Demands with Its Massive Reserves?

A report compiled by a Paris-based agency highlighted that the US is currently the second-largest gas exporter in the world. Their power is so mighty that when China had threatened to impose tariffs on the US, they hadn’t included LNG from the US on the list. Even though China had retaliated against Washington’s tax imposition on Chinese goods that were worth $50 billion, China failed to maintain the status quo here.

Well, why would they? They have secured the spot for the top importer of natural gas and have even knocked Japan into the 2nd place. Currently, China and South Korea dominate the market for the highest imports of natural gas and China is being driven along with the global boom of demands. This will also remain to be the case if they fail to make new investments in self-sustainability according to the IEA.

PetroChina Is Planning to Build More Gas Terminals

The gas usage in China was seen to have risen by 15 percent just last year while their government had planned to implement a series of countermeasures against their targets for air quality. The increased use of imported gas did bring about a positive impact on the airborne pollution of Beijing but also caused shortages in the country where supply access and adequate storage was unavailable.

The IEA also added in their report that they expect to see more policies in China regarding better air-quality. This will, in turn, drive China’s natural gas demand even higher – albeit at a slower rate as opposed to last year. Either way, the country will remain as the top importer of natural gas for 2019.

In order to counter this problem, the IEA believes that an expansion of gas storage capacities will be vital – especially during China’s seasonal needs which will arrive during the winters. Currently, China has been found to have 10 billion cubic meters worth of storage space – which in turn is just 4 percent of its current annual demand. Italy and Germany were found in the report to have very similar statistics of import dependency. Their capacities amounted to about 33 percent and 25 percent respectively.

How China Has Become the New Japan In Terms of Air Pollution

As the demand for natural gas and LNG marches higher, naturally their dependence on imports will too. Even though the country is set to become the 4th largest producer till 2023 due to their yearly increment on production growth by 5.5 percent their share of domestic output is set to fall from 61 to 54 percent.

South Korea, Japan and China had all imported 55 percent of the total 391 bcms of LNG that had been sold the past year. That being said, the statistics of 2023 suggest that their cumulative import share will fall to about 48 percent. Also, with the rest of Asia in the perspective, they will amount to approximately 72 percent of all the LNG that will be sold in 2019.

Sri Lanka Has Given Chinese LNG Plant the Green Light

This demand of LNG from the Asian trio has been fueled by their policies to move towards cleaner forms of energy that are sourced out of coal-fired power plants. This is why China is set to target countries like Sri Lank and Indonesia – which are composed of many islands. These islands have been found to be vessel-borne and perfect for cheaper, cleaner and convenient forms of receiving energy. They are also perfect for the construction of pipelines for gas and petroleum products like diesel.

The Demand for LNG Trucks is Also Soaring in China Due To War on Pollution

In terms of the production side of things, the global output for natural gas is set to rise by 10 percent until 2023. It will be seen by the industry to increase up to 4.13 trillion cubic meters – of which the contribution from the United States will be the highest. Their amount of growth will also be the largest in this period as it has been forecasted to stand at 160 bcm of extra natural gas till 2023.

Much of this extra natural gas will be used to be liquefied into LNG and will naturally be exported. By doing so, the United States is set to become the 2nd largest global seller of LNG till 2023. They will stand at this rank with a forecasted 101 bcm which will also shove Australia into the 3rd rank as they are forecasted to export 98 bcm. Both these producers of natural gas will, in turn, bite Qatar in the heels as they stand at 1st place with 105 bcm of exports. Their cumulative total of bcm exports will amount to a massive 505 bcm!

Meanwhile, China will be left with its need to import natural gas as they are set to defeat their long-standing rivalry with air pollution. Nonetheless, Indonesian and Sri Lankan power plants may just be the answer to their problems of imbalances in trade.

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