Page 10 - AsianOil Week 25 2022

AsianOil EAST ASIA AsianOil

China aiming to re-

export LNG to Japan,

South Korea

PROJECTS & DALIAN, one of China’s coastal cities, is aim-
COMPANIES ing to re-export imported LNG. The city, in
the north-east of the country, sits on the end of
the Liaodong Peninsula in the Yellow Sea and
is a major import site for LNG in China in the
warmer months. Frozen seas in the northern-
most reaches of the Yellow Sea can affect ship-
ping in the winter, however.
The PipeChina Dalian LNG terminal is a
6mn tonne per year (tpy) import site in the city,
but terminal traffic has fallen in recent months
on the back of the latest coronavirus (COVID-
19) outbreak and subsequent lockdowns. As a
result, downstream demand for LNG in many
areas has fallen off drastically. And surging
global gas prices have also taken their toll.
This has led to local PipeChina representa-
tives now applying for export licences applicable
to their Dalian terminal, in a first for the firm.
If successful, bonded tanks will likely be the industry in the north of China.
first construction project undertaken. At pres- Sinopec’s own issues at its Tianjin facility have
ent, though, no indication has been offered at the been ongoing for the better part of a decade, after
local or national government levels on when an ground was broken in 2013.
answer will be forthcoming. Squeezing potential profits further, the
For now, Dalian’s main trade in LNG will Tianjin LNG terminal, part of the Beijing Gas
remain import-based. Group, is another local competitor with 5mn
This is despite increased competition from tpy capacity.
Tianjin, 380 km to the west of Dalian, where a PipeChina’s 2021 investment, therefore,
series of delays in the construction of a Sino- whilst looking to guarantee a leading role in
pec-owned LNG facility have been cleared, and LNG imports in region, has not panned out quite
operations at the 10.8mn tpy site are due to start as expected.
Re-exporting in late 2023. This was a point reinforced earlier this year,
PipeChina also has its own 6mn tpy facility when S&P Commodity Insight LNG Analytics
through Dalian to at the same port. manager Jeff Moore said: “Commodity Insights
In Dalian, meanwhile, around 845,000 no longer expects Chinese LNG imports to grow
proven markets in tonnes of total import capacity has been made in 2022 versus 2021 as spot prices are expected

South Korea and available at the PipeChina terminal between the to remain above $25 per million British thermal
months of June and December, according to the units [$691.50 per 1,000 cubic metres] for the
Japan might, for company. remainder of the year.”
This is believed to include over 250,000
This has seen a number of PipeChina cus-
now, prove to be tonnes in December alone, a number few saw tomers relying on the firm’s understanding of
a better option. coming according to local LNG traders, espe- global LNG markets, with once source saying:
cially with late November and early December “PipeChina is quite understanding, as they
marking the start of winter in the north of the know that we can’t buy in this environment,” and
country. another adding: “It’s a complicated situation in
In December 2021, Dalian received over China, where we are very short but we can’t buy
420,000 tonnes of LNG. But to date this year, the due to high spot prices and low domestic prices.”
Dalian LNG terminal has only received 698,000 To this end, re-exporting through Dalian to
tonnes, a number significantly down on the proven markets in South Korea and Japan might,
1.02mn tonnes over the same period in 2021. for now, prove to be a better option. Indeed,
This, coupled to reports in late 2021 that Pipe- China has already re-exported some LNG vol-
China last year invested CNY24.45bn ($3.8bn) umes earlier this year, with the aim of benefiting
to increase its gas infrastructure has proved from higher spot prices. Based on the news from
indicative of over-saturation in the LNG import Dalian, this option is growing in popularity.™

P10 www. NEWSBASE .com Week 25 24•June•2022