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China has overtaken South Korea as the world’s second-largest importer of LNG, buying 38.1 million tons of the fuel in 2017, compared with 37.6 million tons for South Korea. The number-one importer of LNG is still Japan. This was a 46-percent annual increase in LNG shipments to China.
The 2017 import figures from China are set to rise further this year as Beijing intensifies its fight against pollution by replacing coal with gas and LNG. This urgency led to gas shortages in northern China in December, which swelled LNG imports and pushed prices on the nascent spot market higher for a while.
In December alone, China imported 5.03 million tons of LNG, customs data showed today, beating its November record of 4.06 million tons by 24 percent. The figure was also 35 percent higher than that for December 2016.
Total gas imports hit an all-time high of 7.89 million tons in that month, beating the previous record, booked in November, by 20 percent. This record-high import rate made for a fitting end to a year that saw natural gas imports into the country soar by 27 percent annually to 68.57 million tons.
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The drive against pollution also pushed the country’s domestic gas production to a three-year high last year, at 147.4 billion cubic meters, up 8.5 percent on an annual basis.
These developments will likely turn China into a major LNG spot market swinger, Reuters’ Clyde Russell noted in a recent column. Based on historical data about seasonal demand patterns, Russell suggests that shipments of LNG to China might fall by as much as 40 percent from their December 2017 high, which will most likely weigh heavily on spot prices.
At the same time, China will not be the only factor affecting prices this year, he adds, noting the ramp-up at Chevron’s Wheatstone offshore project in Australia, and Shell and Inpex getting closer to launching their Ichthys and Prelude projects, respectively.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.