China briefly overtook Japan as the world’s largest consumer of LNG in November, before slipping back to end 2018 in second place.
The country added a staggering 12.7 million tonnes to its LNG imports last year, bringing its total for 2018 to 54 million tonnes, ahead of South Korea’s 44 million tonnes but still behind Japan’s 82.8 million tonnes.
Forecasters confidently expect China to become the largest buyer as it continues to tackle air pollution and reduce its dependence on coal.
Vincent Demoury, general delegate of the International Group of LNG Importers (GIIGNL), told the LNG2019 conference in Shanghai this month that China now represents 17% of global LNG imports.
“As energy demand grows and as policy orientations tend to favour the use of gas over coal, opportunities are multiplying in the LNG space in China,” he said.
Earlier in the week, China LNG Shipping (International) Co general manager Captain Shu Binglin said China will need to acquire 60 to 80 LNG carriers by 2030 to meet a commitment to increase its use of natural gas to 15% of its primary energy mix by 2030.
Towngas managing director Alfred Chan said 16 LNG receiving terminals are operating in China, offering a total of more than 50 million tonnes per annum in regasification capacity. Thirty other terminals are at the planning and construction phase, he added, while other commentators highlighted expansion plans for existing facilities.
As energy demand grows and as policy orientations tend to favour the use of gas over coal, opportunities are multiplying in the LNG space in China
“We are absolutely confident that natural gas, along with renewables, will flourish for decades to come,” Chan said. “LNG will no doubt become the centrepiece of that growth.”
LNG is only one aspect of a state-backed drive to switch from coal to natural gas. From the end of this year, the Power of Siberia pipeline from eastern Russia will start supplying natural gas to China.
Franklin Khan, Minister of Energy and Energy Industries for LNG producer Trinidad & Tobago, said the pipeline will bring 38 billion cubic metres of natural gas to China, equivalent to roughly 28 million tonnes per annum of LNG, or about half its LNG imports for 2018.
But Khan and others said China’s lack of pipeline infrastructure for onward distribution and storage, plus concerns about the strategic risk of becoming dependent on piped supply from another country, which could be disrupted, are issues.
In contrast, speakers at the event highlighted that LNG can be bought from a more diverse range of sources.
Keep on trucking
Several spoke about China’s rapidly developing “retail sector” for LNG, which is also boosting demand. They cited the growing LNG trucking fleet, which is able to offer a greater reach and penetration of the market than pipeline gas.
Demoury pointed out that one-quarter of the LNG received last year was distributed by truck, quoting the eye-popping statistic that a new LNG truck is delivered every 30 seconds in China.
Chan said a new ruling will make it mandatory that only LNG-fuelled trucks will serve container ports, to help cut emissions in those areas.
China is also waking up to the potential for supplying LNG as bunkers — to seagoing vessels and to ships plying its coastal areas and inland waterways.
Huang Dinan, chairman of Shenergy Group, which provides 95% of Shanghai’s natural gas supply, said his company has been working on LNG for maritime use and has built China’s first LNG bunkering station. “We would like to work with all the partners across the globe,” he added.