Chinese gas imports, including LNG, inch above Japan’s for the first time

Chinese gas imports, including LNG, inch above Japan’s for the first time

China is set to become the world’s largest importer of natural gas for the first time, overtaking long-time front-runner Japan. Over the first eight months of this year China has imported the equivalent of 57.18M tonnes of LNG, in the form of LNG and pipeline deliveries. In contrast, Japan has imported 56.45M tonnes, all in the form of LNG, over the January-August 2018 period. Natural gas imports are growing much more quickly in China – in the form of both LNG and pipeline deliveries – than in Japan, where LNG import volumes are relatively stable. This trend will reinforce the emergence of China as the world’s top natural gas import nation by the end of 2018. China’s August 2018 LNG imports were up by 51.5% year-on-year on the same month in 2017, reaching 4.71M tonnes. The August results boosted China’s total LNG imports for the first eight months of 2018 to 32.63M tonnes, a leap of 47.8% over the tally recorded in the first eight months of 2017. At the same time, China’s imports of natural gas by pipeline in August 2018 were up by 21.2% over the same month last year, reaching the LNG equivalent of 3.06M tonnes. The country’s pipeline imports in the first eight months of 2018 were up by 20.7% over the same period a year ago, reaching the LNG equivalent of 24.55M tonnes. Japan’s LNG imports in August 2018 climbed by 4% on the same month a year earlier, to reach 7.7M tonnes. Three months of unusually hot weather had left the country with a considerable level of late summer restocking demand. This year Japan has brought a handful of its nuclear reactors, idled for safety checks following the March 2011 earthquake and tsunami, back onstream. Nevertheless, the country’s demand for LNG imports remains steady. If the pace of import volumes for the first eight months was extrapolated over the year as a whole, Japan is set to purchase 84.7m tonnes of LNG in 2018, a marginal 1.4% rise on the 2017 volume. If China maintains its current high rate of LNG import growth, it will be vying with Japan for the top spot among LNG buyers by as soon as the end of 2019. It would then emerge as the clear leader in 2020. There are a number of potential obstacles to this high-side forecast for China’s LNG purchases, not least the availability of both product and sufficient regasification capacity. China’s 20 or so receiving terminals are currently working at high utilisation rates and although new capacity, in terms of new facilities and expansions of existing installations, is under construction, it will not be ready by 2020. As a result of six new export projects currently in service or under construction, the US is set to be the leading provider of incremental LNG supplies to the world market over the next few years. While China would require some of these new US LNG supplies to achieve a virtual doubling of LNG imports in the space of a few years, the two countries are currently engaged in an escalating trade war. In retaliation for tariffs introduced by the Trump administration on a range of Chinese imports, China began levying a 10% surcharge on US LNG imports on 24 September. As US LNG, based on Henry Hub prices, is relatively cheap in a global context, it is believed that Chinese buyers would not find the 10% surcharge too painful. However, the possibility of a further escalation in the trade imbroglio is likely to be a deterrent to further LNG sale and purchase agreements (SPAs) involving the two countries. Other LNG export nations, existing and potential, are ready to press ahead with new projects, to meet Chinese import needs and take advantage of the current US-China stand-off.

https://www.lngworldshipping.com/news/view,chinese-gas-imports-including-lng-inch-above-japans-for-the-first-time_54354.htm

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