China records largest decline in LNG imports in 2022
Volumes fell 19% to 64.13 million tonnes as slow economic growth and Covid controls ate into demand growth
High prices, sluggish economic growth and Covid-related controls seriously slashed China’s demand for liquefied natural gas imports last year, with volumes decreasing 19% to 64.13 million tonnes, the largest annual decline since its maiden import in 2006.
In 2021, China took delivery of 79.3 million tonnes of LNG and surpassed Japan as the world’s largest importer.
Most of the import cargoes last year were handled by terminals operated by China National Offshore Oil Corporation, PipeChina, PetroChina and Sinopec along China's southern and eastern coastlines.
Trading sources said the nation’s 24 receiving terminals handled 952 shipments from 22 countries last year.
Qatar has outshone Australia as China’s largest LNG supplier in 2022, according to traders, although export volumes were not immediately available at the time of publication.
This trend will continue for many years as Chinese buyers have secured additional cargoes from Qatar via long-term sales and purchase agreements.
More LNG supplies from Qatar will help China diversify its imports, as its relationships with the US and Australia are at a low ebb.
China’s hard line zero-Covid policy has strangled its economic growth, which has capped LNG demand for industrial fabrication, power generation, public services and transport. Chinese traders diverted their unrequired cargoes to customers in Europe, which is gas hungry — in part due to pipeline gas supply disruptions from Russia.
Traders said that China’s appetite for spot LNG cargoes is particularly weak, with buyers favouring long-term contracts and cheaper pipeline gas.
Gas throughput via the Russia-China pipeline last year was ramped up to an average of 15 billion cubic metres per day from 10 Bcm in the previous year. Meanwhile, imports of liquid petroleum gas increased by 10% to 34.15 million tonnes.
The high price of LNG saw Chinese customers turn to dirtier fuels, such as coal and LPG.
China historically has used coal as the backup fuel when supplies of cleaner fuels, such as natural gas, fall short or prices are too high. Last year, China’s domestic coal production increased 8% to 4.45 billion tonnes; and the National Energy Administration has called for coal output this year to be boosted by a further 200 million tonnes.
Russia’s war on Ukraine triggered a spike in global gas prices, pushing Asian spot LNG prices to historic highs.
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