EIA: China’s annual LNG imports down for first time since 2006
Chinese imports of LNG declined by 1.1% year-on-year in 2015 for the first time since the country began importing chilled gas in 2006, the U.S. EIA said in a report on Thursday.
LNG World News previously reported that China’s imports dropped to 19.63 million tonnes in 2015.
Chinese LNG imports have grown steadily in the last 10 years, from 0.1 billion cubic feet per day (Bcf/d) in 2006 to 1.3 Bcf/d in 2010, and have more than doubled since then. They reached their peak in 2014 at 2.7 Bcf/d, making China the third-largest LNG importer globally after Japan and South Korea, EIA said in the report.
In 2015, however, LNG imports declined to 2.6 Bcf/d, reflecting in part a slowdown in the growth of the Chinese economy and lower prices of competing fuels, EIA said.
According to the report, at the end of 2015, China had 13 LNG regasification import terminals with a combined capacity of 5.4 Bcf/d. Several more terminals are under construction, with a combined capacity of 3.4 Bcf/d. These terminals are scheduled to come online in 2016-19.
However, the start-up of several terminals has been delayed because of a lack of downstream demand. For example, construction of Jieyang LNG terminal in Guangdong was completed last year, but the terminal has not been connected to a provincial pipeline network serving end users.
The terminal’s end users are factories that can also run on liquefied petroleum gas (LPG). Current LPG prices are lower than long-term contractual LNG prices, so LPG is being used to meet the demand.
Additionally, many contracts to supply LNG at the new regasification terminals were signed when oil prices were above $100/barrel, which makes long-term LNG prices less competitive than both spot LNG and LPG, EIA noted.
Major Chinese oil and gas companies have been trying to postpone shipments of contracted LNG to the new terminals and instead purchase lower-priced spot cargoes.
In November 2015, the Chinese government lowered the ceiling for citygate natural gas prices for nonresidential sectors by $2.95 Million British thermal units (MMBtu), a decrease of approximately 28%, EIA said.
Lower prices are expected to stimulate natural gas demand growth going forward, particularly in the power generation and transportation sectors, the report added.
Source: The U.S. Energy Information Administration (EIA)