China will stay the driving force behind the world’s LNG demand this year and next, according to Keisuke Sadamori, the International Energy Agency’s (IEA) director for Energy Markets and Security. The country’s unabated energy hunger, particularly for natural gas and LNG, is due to “strong industrial demand,” he told a conference in Hiroshima, Japan.
Asia’s largest economy last year overtook Japan as the world's top LNG buyer, when the latter’s demand started to fall as a consequence to nuclear reactor restarts, accelerated roll out of renewable energy and weak economic growth.
But despite the overall slow GDP growth in both Japan and China, gas demand in the People’s Republic increased by around 10 percent in the first eight months of this year and is set to expand by 16 percent by 2025, compared to 2023. According to IEA analysis, this is mainly driven by industrial sectors, as well as by some coal-to-gas switching in electric power generation.
"Strong domestic demand growth is set to drive up China's energy imports to new record highs, both in 2024 and 2025, solidifying its position as the world's largest LNG market," Sadamori commented.
It is worth noting that China produces rising volumes of gas at home, in addition to importing natural gas through pipelines from Russia, Azerbaijan, Kazakhstan and to a lesser extent from from Myanmar (the former Burma) and a joint team from China-Nepal in recent months started oil & gas exploration in northwestern Nepal's Dailekh region. Apart from long-term pipeline gas deliveries, China also imports LNG cargoes – mostly under oil-indexed term contracts but increasingly also spot cargoes.
State buyers keep their eyes peeled on Russia
Volumes of natural gas and LNG imported by China keep growing as the Peoples Republic needs the cleaner-burning fuel as a backup for its growing share of renewables in the energy mix. According to Chinese customs data, the volume of gas imported by China was last reported at 11.99 mill tonnes, a rise of 1.9 percent rise month-on-month – mostly covered by Russian pipeline gas.
Oil imports, in contrast, fell by 7.3 percent to 45.48 million tonnes. Officials from China's General Customs Administration pointed out that the country increased its foreign gas purchases by 13 percent in the first three quarters of 2024, while oil imports decreased by 2.8 percent over the same period.
Demand for gas soars, oil stays sluggish
Customs data shows that China's overseas supplies of gas and oil in the first nine months of 2024 reached 99.08 million tonnes and 412.38 million tonnes, respectively. In terms of value, gas supplies reached $48.65 billion – up 3.7 percent, compared with January/ September, 2023 – while crude oil supplies totalled $248.72 billion, a rather tiny 0.2 percent uptick.
In 2023, oil volumes imported to China were up 11 percent to 563.99 mill tonnes and natural gas imports by 9.9 percent to 119.97 million tonnes in 2023 – and demand has not been stopping there.
Russia was, in fact, the leading exporter of energy to China, with the country having purchased 107 mill tonnes of Russian oil (+24 percent ) and 8 million tonnes of LNG (+23 percent ) last year. Deliveries through the Power of Siberia gas pipeline increased 1.5 times to a record-breaking 22.7 billion cubic metres.
