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A Limited Risk Play In A Shaken Market

A Limited Risk Play In A Shaken Market

Recession fears tanked stock markets…

China May End Up With 50 Bcm Natural Gas Glut By 2020

NatGas power plant

Growing LNG imports and increased pipeline capacity for imports could result in China having an excess of 50 billion cubic meters of natural gas by 2020, Platts reported, quoting an economist who spoke at an event on Wednesday.

Chinese LNG imports are seen rising from 19.65 million mt a year (or 27 Bcm) in 2015 to more than 40 million mt/year by 2020 and upwards of 50 million mt/year by 2030, according to Feng Chenyue, senior economist at the gas market department of CNPC Research Institute of Economics and Technology.

Currently, China has 11 LNG receiving terminals with a total capacity of 40.8 million mt/year. But it is building another six terminals and expanding three existing ones, the analyst said at the 10th IEEJ/CNPC research meeting in Tokyo, as quoted by Platts.

LNG imports aside, China’s pipeline importing capacity is also expected to grow to 100 Bcm and import volumes are seen rising to 65 Bcm by 2020, compared to importing pipeline capacity of 67 Bcm for 2015, in which the utilization rate was some 50 percent.

Projections for the supply-demand dynamics of gas are that China would import 120 Bcm of LNG and gas via pipelines that would add to its 220 Bcm domestic gas supply in 2020. On the demand side, expectations are for demand rising to 290 Bcm in 2020 from 192 Bcm last year. This could potentially result in a 50 Bcm excess supply, Feng said.

Demand could further grow, however, as China is trying to switch from coal to using more gas for its energy needs, the analyst noted.

But domestic supply growth is not out of the question, either: China’s shale gas ambitions may upend international energy markets, even if in a longer-than-2020-term. According to the U.S. Energy Information Administration’s International Energy Outlook 2016, China, which was last year producing 500 million cubic feet of shale gas daily, is on its way to ramping this up to over 20 billion cubic feet daily by 2040.

By Tsvetana Paraskova for Oilprice.com

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