- China is expected to overtake Japan’s position as the largest LNG importer in the near future, do you think China’s demand growth will be sustained while China has its economy slowdown?
China’s LNG demand growth already slowed in 2019 compared to the previous three years, with imports gaining roughly 6.5 million tonnes over 2018 levels compared to growth in the realm of around 11 million tonnes for the previous three years. However, it shouldn’t be understated that this volume still ranked China near the top of the list of the fastest-growing markets globally. It’s important to note that even in an environment which features economic slowdown, the underlying reasons that have helped LNG imports grow over the past several years are still in place. These are policies that favor natural gas consumption and expansion in infrastructure. With that in mind, although it’s unlikely we’ll see China’s LNG imports grow at the rate they did from 2016-2018, we should still see fairly healthy growth in China’s LNG consumption in the near future.
- The current market is impacted by the weaker Asian demand and of course the US-China trade tension, how much of the new supply from the 2nd wave US LNG projects will be absorbed by Asia market and China? Where is the new demand come from in Asia market?
We have already seen some interest from emerging buyers for US LNG. This is most-evident with the signing of 2 million tonnes of LNG from Magnolia LNG in Louisiana to Vietnam. There are other emerging buyers that will be looking for supplies during the next wave of LNG liquefaction build-out, and Asia will need to pull in supplies from outside the Pacific basin to help feed this demand.
- With the new Russia-to-China natural gas pipeline ‘Power of Siberia’ in operation since December 2019, do you think pipeline gas will overtake LNG’s position in China’s gas imports and energy mix?
Pipeline gas from Russia will certainly help feed growing Chinese natural gas demand in the next several years as the Power of Siberia ramps up. However, LNG already represents a significant portion of Chinese natural gas supply (26% compared to pipeline imports market share of 17% in 2019). Platts Analytics is forecasting LNG spot prices to fall to historic lows in 2020, meaning LNG should retain market share and grow as China’s natural gas demand continues to ramp up.