Natural Gas Imports: China Set to Surpass Japan


Beijing’s crackdown on pollution has put China on track to overtake Japan this year as the world’s biggest importer of natural gas, used to replace dirtier coal.

China, already the biggest importer of oil and coal — is the world’s third biggest user of natural gas behind the United States and Russia, but has to import around 40 per cent of its total needs as domestic production cannot keep up with demand.

As per industry sources, China’s 2017 imports of pipeline gas and liquefied natural gas (LNG) will top 67 million tons, up by more than a quarter from a year earlier. LNG imports alone surged more than 50 per cent. The data, which includes LNG tanker arrivals to China and pipeline monthly import flow estimates, is preliminary as December, 2017 figures are not yet public.

China still lags Japan, with annual gas imports of around 83.5 million tons, all as LNG, but its overall gas imports topped Japan’s in September and again in November, Government data and shipping flows revealed. Analysts opined that the trend is set and China should top Japan for the full year in 2018.

“Both LNG and pipeline imports will continue to increase in the next few years. We expect China to overtake Japan as the world’s largest gas importer in 2018,” said Miaoru Huang, Asia gas and LNG senior manager at energy consultancy Wood Mackenzie. But Japan will remain as the number one LNG importer till around 2028, she added.

In 2017, China started to move millions of households and many industrial facilities from coal to gas as part of efforts to clean its skies, triggering an unprecedented queue in overseas import orders. China’s three biggest LNG suppliers are Australia, Qatar and Malaysia, while pipeline imports come from Central Asia and Myanmar. A pipeline connecting China to Russia is under construction.

Unlike established LNG importers which import the bulk of their cargo under long-term contracts with fixed monthly volumes and a link to the oil market, many Chinese utilities buy LNG in the spot market when they need it at short notice, such as the current peak demand winter season.

As a result, Asian spot LNG prices have more than doubled since June to USD 11.20 per million British thermal units (mmBtu), their highest since November 2014, making LNG one of 2017’s strongest performing commodities.

Sea News, January 8