China Gas Imports Hit All-Time High

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By Irina Slav, Oilprice.com

Natural gas imports into China reached an all-time high in December as the country fought a cold spell amid efforts to reduce its dependence on coal and replace it with gas. At 7.89 million tons—including pipeline flows and LNG shipments—the December figure beat the previous record, booked in November, by 20 percent.

This record-high import rate makes for a fitting end to a year that saw natural gas imports into the country soar by 27 percent annually to 68.57 million tons.

It seems Beijing’s drive to reduce coal consumption and increase gas consumption was a bit hurried: winter hit northern China hard and led to gas shortages in certain regions, sending domestic LNG prices to a three-year high despite the global glut. That’s because there are infrastructure challenges to LNG and natural gas supply to China, CNBC noted in a story from early December.

The problem is the lack of enough pipelines to carry the fuel everywhere it is needed now that coal is being phased out. What’s more, those pipelines that are being built, are being built too slowly to be able to respond to the increased demand for gas during peak heating season.

Meanwhile, as gas had to be diverted to households, the Chinese chemical, trucking, and manufacturing industries suffered shortages, the FT reported in early December. A number of chemicals producers in southern and western China were ordered to curb or entirely shut down production until March.
Related: Cold Snap Leads To Biggest U.S. Natural Gas Draw Ever

Domestic output of natural gas has been growing, too, Reuters reported in December, rising by 9.7 percent on an annual basis from January to October. While pipeline imports all rose, the biggest increase was in LNG imports, which were 50 percent higher in the ten-year period from a year earlier.

As the new year started, however, LNG prices in northern China have fallen sharply from their peak in late December. This week, according to Reuters, wholesale LNG prices in the North averaged a bit over US$848 per ton, down 45 percent from late December.

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