China gas monthly: Marching toward market liberalization

Current low LNG spot prices and China’s LNG terminal thirdparty access slots have attracted a growing number of new and small Chinese companies to seek more LNG purchases. China’s national oil and gas companies (NOCs) have been transferring assets to the newly created China Oil and Gas Pipeline Network – better known as PipeChina – which is expected to enhance and optimize utilization of existing gas pipeline and LNG facilities.
 

• There have been a number of recent LNG contract signings in Guangdong province, which has six existing LNG terminals. Local gas and power utilities are actively working with international oil and gas companies to secure supply and take advantage of third-party access at LNG terminals.

• PipeChina, formed in December 2019, is busy taking over ownership of some of the three NOCs’ backbone pipeline, LNG terminal and underground storage facilities before the winter. It will potentially start to operate them in the coming peak season.

• July LNG imports totaled 5.25MMt, up 2% from last month and 13% from a year earlier – by Bloomberg estimates. China’s eastern terminals saw the biggest month-on-month growth of 13% as gas demand picked up from a low in June.

• June gas consumption of major provinces in the south and north rose 14% and 12%, respectively from a year earlier, while demand in the east fell 9%, possibly due to downstream sales constraints.

• BloombergNEF estimates China’s gas demand will be stable in August at 26.6Bcm and see a modest drop into September. August LNG imports are expected to drop 1% from July.

13%

China’s July LNG imports
growth year-on-year

 

70%

LNG terminal average utilization rate,
year-to-date (January-July)

 

26.6Bcm

Estimated August
total gas demand

Gas dashboard: Pipeline to LNG switching as price gap narrows