China is Becoming the Top Natural Gas Importer in the World

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China is Becoming the Top Natural Gas Importer in the World - China is Becoming the Top Natural Gas Importer in the World

After Deng Xiaoping’s “Reform and Opening up Policy” in December 1978, China’s unprecedented economic development caused serious environmental problems. The pollution of industrialized and populated coastal areas has reached a very high level, threatening the stability of the country. Therefore, it is not surprising that the government implements clean fuels and production methods.

According to the data released by the General Administration of Customs, China imported 7.41 million tons of natural gas through natural gas pipelines and ships in May. This brings China’s total natural gas import volume to 34.9 million tons in the first five months of this year. Japan’s Ministry of Finance data shows that Japan’s total natural gas import during this period was 34.5 million tons. This is a milestone for a country that has not even imported the fuel 15 years ago.

Cumulative natural gas imports over the course of the year - China is Becoming the Top Natural Gas Importer in the World

Sources: China Customs; Japan Ministry of Finance

Note: Cumulative natural gas imports over the course of the year

At present, China’s liquefied natural gas(LNG) shipments account for only half of its natural gas import volume, and the demand for LNG is growing rapidly. Last year, about 38 million tons of liquefied natural gas was imported, which is higher than the amount in 2010 of 10 million tons. Last year alone, China achieved the status as the second largest importer. In a June 15 report, analysts at JPMorgan Chase & Co. Said, “China’s on track to become the world’s biggest LNG importer by 2021 as growth in domestic production and pipelines won’t be able to keep pace with needs.”

A part of the new volume was shipped from a recently built liquefaction plant in the United States. The United States last year supplied 4% of China’s LNG demand, making it the fifth largest supplier of liquefied natural gas in China. Despite increasing signs of the potential trade war with the United States, China has excluded LNG from the list of proposed retaliatory tariffs to be imposed on U.S. goods, reflecting the Chinese government’s priority in maintaining access to LNG.

Under the leadership of Chinese President Xi Jinping, China has begun a large-scale shift from coal-fired power generation to natural gas, which will greatly reduce dust and SOx emissions from soot. Especially in the northern part of China, millions of households and factories are forced to use gas burners instead of coal-fired boilers.

In the next year, when Gazprom launches the “Power of Siberia” gas pipeline, piped gas supplies could get a boost. The project will transport up to 60 billion cubic meters of natural gas from Russia to China each year, equivalent to about 45 million tons of liquefied natural gas – more than the total amount imported by China in 2017. The parties have already negotiated about the next parallel pipeline construction with equivalent capacity.

 

 

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