Natural gas imports to China jumped by 17.4 percent on the year in the first two months of the year to 28.68 billion cubic meters thanks to the coldest winter in decades, according to Platts data.
The harsh winter in Asia drove a huge spike in demand for natural gas in the region, which led to a surge in spot market LNG prices. Now, this demand is retreating, and prices are down to more normal levels.
China is among the world’s top natural gas importers, along with Japan and South Korea, and therefore a prime target for gas exporters. PetroChina, for example, doubled the amount of Russian gas it receives via the Power of Siberia pipeline to 28.8 million cu m daily over the first two months of the year. Sinopec, for its part, ordered 30 cargos of liquefied natural gas for the period to make sure there was an adequate supply of the fuel.
China is dependent on imports for a solid portion of its gas consumption, so the country is making an effort to also boost domestic production to reduce this dependence. Last year, despite the pandemic, it made progress in that respect, with natural gas production jumping 15 percent on the year, according to Fitch Ratings. The agency noted domestic production was likely to continue growing thanks to robust demand and efforts to decarbonize the Chinese economy.
Yet self-sufficiency in gas is still a dream—and it may remain a dream. China has massive shale gas reserves but exploiting them is challenging because of the complex geology of the deposits and difficulties in attracting foreign investors who could help fund such an endeavor.
This means China will remain a huge natural gas importer for the observable future, driving intense competition in the energy industry.
By Charles Kennedy for Oilprice.com
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