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CNPC: LNG Prices To Determine China’s Import Growth

China LNG

Chinese imports of liquefied natural gas (LNG) could rise to around 80 million tons by 2025 from 54 million tons in 2018, according to Ling Xiao, a senior official with the China National Petroleum Corporation (CNPC).

The coal-to-natural gas switch and the rise of the share of gas in China’s energy mix will be the key drivers of growth, Reuters quoted Ling as saying at the LNG2019 conference in Shanghai on Wednesday.

China’s breakneck demand surge of the past two years is expected to slow down this year as Beijing is determined to avoid severe shortages by boosting pipeline connectivity, building more storage and import terminals, and raising domestic natural gas production.

“Economic slowdown, a more considered approach on coal-to-gas switching and increased domestic infrastructure availability will mean LNG demand will slow in 2019, from the 40-45% growth we have seen in 2017 and 2018,” energy consultancy Wood Mackenzie said in its 2019 LNG outlook in early January.

“But China will still grow at around 20%, by far the largest source of LNG demand growth in the global market,” according to WoodMac.

The pace of Chinese import growth will also depend on LNG prices and contracts, because they will have to compete with pipeline gas, according to Ling of CNPC, whose gas imports represent some 60 percent of all of China’s gas imports.

Russia’s giant Gazprom will begin natural gas deliveries to China via the Power of Siberia pipeline ahead of schedule, as early as December 1, 2019, Alexey Miller, Chairman of Gazprom’s Management Committee, said earlier this year.

“LNG import prices are not competitive with pipeline gas now, and the opening of the Russia pipeline will pose further threat to LNG imports,” CNPC’s Ling said, as carried by Reuters.

Shorter and cheaper LNG contracts are the only way in which LNG can be really competitive to pipeline gas, according to the official.

By Tsvetana Paraskova for Oilprice.com

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