Page 13 - AsianOil Week 25 2022

GLNG ASIA GLNG

China aiming to re-export LNG to

Japan, South Korea

EXPORTS DALIAN, one of China’s coastal cities, is aim- In December 2021, Dalian received over
ing to re-export imported LNG. The city, in 420,000 tonnes of LNG. But to date this year, the
the north-east of the country, sits on the end of Dalian LNG terminal has only received 698,000
the Liaodong Peninsula in the Yellow Sea and tonnes, a number significantly down on the
is a major import site for LNG in China in the 1.02mn tonnes over the same period in 2021.
warmer months. Frozen seas in the northern- This, coupled to reports in late 2021 that Pipe-
most reaches of the Yellow Sea can affect ship- China last year invested CNY24.45bn ($3.8bn)
ping in the winter, however. to increase its gas infrastructure has proved
The PipeChina Dalian LNG terminal is a 6mn indicative of over-saturation in the LNG import
tonne per year (tpy) import site in the city, but industry in the north of China.
terminal traffic has fallen in recent months on Sinopec’s own issues at its Tianjin facility have
the back of the latest coronavirus (COVID-19) been ongoing for the better part of a decade, after
outbreak and subsequent lockdowns. As a result, ground was broken in 2013.
downstream demand for LNG in many areas Squeezing potential profits further, the
has fallen off drastically. And surging global gas Tianjin LNG terminal, part of the Beijing Gas
prices have also taken their toll. Group, is another local competitor with 5mn tpy
This has led to local PipeChina representa- capacity.
tives now applying for export licences applicable PipeChina’s 2021 investment, therefore,
to their Dalian terminal, in a first for the firm. whilst looking to guarantee a leading role in LNG
If successful, bonded tanks will likely be the imports in region, has not panned out quite as
first construction project undertaken. At pres- expected.
ent, though, no indication has been offered at This was a point reinforced earlier this year,
the local or national government levels on when when S&P Commodity Insight LNG Analytics
an answer will be forthcoming. manager Jeff Moore said: “Commodity Insights
For now, Dalian’s main trade in LNG will no longer expects Chinese LNG imports to grow
remain import-based. in 2022 versus 2021 as spot prices are expected
This is despite increased competition from to remain above $25 per million British thermal
Tianjin, 380 km to the west of Dalian, where a units [$691.50 per 1,000 cubic metres] for the
series of delays in the construction of a Sino- remainder of the year.”
pec-owned LNG facility have been cleared, and This has seen a number of PipeChina custom-
operations at the 10.8mn tpy site are due to start ers relying on the firm’s understanding of global
in late 2023. LNG markets, with once source saying: “Pipe-
PipeChina also has its own 6mn tpy facility at China is quite understanding, as they know that
the same port. we can’t buy in this environment,” and another
In Dalian, meanwhile, around 845,000 tonnes adding: “It’s a complicated situation in China,
of total import capacity has been made available where we are very short but we can’t buy due to
at the PipeChina terminal between the months of high spot prices and low domestic prices.”
June and December, according to the company. To this end, re-exporting through Dalian to
This is believed to include over 250,000 proven markets in South Korea and Japan might,
tonnes in December alone, a number few saw for now, prove to be a better option. Indeed,
coming according to local LNG traders, espe- China has already re-exported some LNG vol-
cially with late November and early December umes earlier this year, with the aim of benefiting
marking the start of winter in the north of the from higher spot prices. Based on the news from
country. Dalian, this option is growing in popularity.™

Week 25 24•June•2022 www. NEWSBASE .com P13