Russia exported more LNG to China in June than the United States did, at 396,000 tons versus 340,000 tons, Russia's Sputnik reports, citing data first quoted by Bloomberg.
According to the data, from Chinese customs authorities, Russia LNG imports were 20.7 percent higher than a month earlier, while U.S. imports of LNG were just 2.4 percent higher.
Separately, Natural Gas World reported that China's liquefied natural gas imports in June were 29 percent higher than a year ago, at 5.79 million tons. January to June imports of LNG were also higher. The data refutes earlier reports suggesting that China's LNG imports in June were down 7 percent on the year as the heating season ended, reducing demand.
China recently became the largest LNG importer in the world, turning into a battleground for producers amid tanking prices driven by an oversupply similar in gravity to the oversupply in crude oil markets.
In fact, prices are so low that, according to a Reuters report, at least one state energy giant is looking for long-term LNG import deals. Sinopec wants to contract 1 million tons of liquefied gas for a period of 10 years, starting in 2023, industry sources told Reuters last week.
LNG prices on the spot market are now hovering near all-time lows because of the influx of supply from new projects and the slump in demand caused by the coronavirus pandemic.
The International Energy Agency last month published a new report on gas and LNG in which it said that "natural gas is expected to experience its largest demand shock on record in 2020 as the Covid-19 pandemic hits an already weakened market."
This weakened market is a buyers' market, so the competition on price is more intense than ever. Due to geographical reasons, Russian LNG--for--now tends to be cheaper than U.S. LNG, which could explain the difference in imports into China.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Russia is of great interest to China not only because it is a major supplier of crude oil, gas and LNG to it but also because Russia owns and runs oil and gas pipelines to China providing vast quantities of crude oil, natural gas as well as LNG. This helps China overcome issues of energy security particularly in relation to crude oil shipments from the Arab Gulf having to pass through the very critical chokepoints of the Straits of Hormuz and Malacca. Furthermore, China has relatively large investment in Russia’s private LNG Company, Novatek, which is emerging as a major LNG producer from its Arctic plants.
Since Russia began LNG exports in 2009 with the Sakhalin-2 project, its exports of LNG have increased by five-fold. Russia is certainly betting big on its ongoing development of new LNG projects with the aim of seizing a 15% share of the global LNG market.
China has recently overtaken Japan to become the world’s largest LNG importer. Its LNG imports in June at 5.79 million tons were 29% higher than a year ago according to Natural Gas World. The data refutes earlier reports suggesting that China’s LNG imports in June were down 7% on the year as the heating season ended, reducing demand.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London