Page 10 - GLNG Week 40

GLNG COMMENTARY GLNG

China’s push to expand gas’ share of the projects in Zhejiang, Jiangsu and Guangdong
energy mix saw the cleaner burning fuel account provinces had been delayed alongside expan-
for 8.1% of primary energy consumption in sion projects at the Qidong and Qingdao ter-
2019, with Beijing targeting a 15% share by 2030. minals. The pandemic may have also delayed
The Asian economic giant consumed 308bn the Tangshan LNG Phase 3 and Shanghai LNG
cubic metres of gas last year, while importing Phase 2 projects.
127.65 bcm. If these last two projects fail to come on
Overall gas use is expected to rise 4-6% this stream this year, then the country’s import
year, leading to a 10% year-on-year growth in capacity will be limited to around 19.4mn tonnes
LNG imports to 65mn-67mn tonnes, according of LNG in the fourth quarter and 18.9mn tonnes
to a recent Reuters report, citing analysts and in the first three month of 2021.
Chinese traders. If this plays out and the trend Despite such considerations, China remains
continues over the coming years, China could in a relatively robust supply position, having Chinese buyers
overtake Japan to become the world’s leading trimmed its piped gas imports between Janu-
LNG importer by 2022. ary and August in order to facilitate a 10.3% y/y have had the
“After taking a brief hit earlier this year due increase in LNG purchases. This trend could luxury to choose
to the [coronavirus] COVID-19 pandemic, Chi- continue in the final quarter, with IHS Markit
na’s gas demand recovered faster than expected, senior analyst Lu Xiao saying: “[Fourth-quar- between more
driven mostly by the industrial sector that has ter] imports will remain robust ... as LNG is both
recovered to 2019 levels since May,” Reuters more competitive and flexible versus pipeline commercially
quoted FGE analyst Alicia Wee as saying. gas, despite a recent spot price spike.”
Yet while imports have picked up, the coun- Chinese buyers have had the luxury to choose attractive
try’s ability to lean on its LNG terminals to between more commercially attractive supplies supplies in recent
respond to winter demand surges is in question, in recent months, owing to both the country’s
thanks to a series of regasification project delays. growing import options and the global gas sup- months.
ply glut.
Projects and the pandemic The country has built more import capacity,
Of the eight Chinese LNG projects originally underground storage and domestic transporta-
slated to start up this year, six have been delayed tion infrastructure in preparation of anther coal
till next year and the status of the remaining conversion drive. This, coupled with the fact
two remains uncertain. Infrastructure projects that Beijing is prepared to lean on coal should
across the country have been delayed this owing the need arise, will likely allow China to survive
to the pandemic. the winter without a repeat of the supply pains
Argus Media reported that four greenfield from 2017-18.™

P10 www. NEWSBASE .com Week 40 09•October•2020