Trade talks between the US and China are expected to resume in October, but US LNG producers can already count the cost of earlier failed negotiations, which resulted in the imposition of 25% tariffs on their LNG exports to China. The number of US LNG cargoes heading to China so far this year has plummeted from levels in 2018.
Even for producers not facing tariffs, China’s LNG demand is not showing the dynamism of the last two years. China’s LNG boom in Winter 2017 reflected a lack of policy coordination between coal-to-gas switching on the one hand and the country’s domestic gas supply capabilities on the other. Two years later and China enters the 2019/2020 gas year better prepared.
In addition, the trade dispute has compounded the already evident slowdown in Chinese GDP growth. Chinese LNG demand is still expected to rise by more than 10% this year, but this is a far cry from the near 44% growth seen in 2017 and 39% in 2018.
Strong but not stellar demand growth now appears the order of the day. China’s LNG imports are expected to rise to 80 million tons per annum (mtpa) by 2025 up from around 54 million tons in 2018, according to forecasts made by the China National Petroleum Corporation.
Start-up at the end of the year or in early 2020 of the 38 Bcm/yr (3.7 Bcf/d, 27.8 mtpa) Power of Siberia pipeline will bring more Russian gas into China’s north, although flows will take time to ramp up and are not expected to reach…