China’s LNG imports fell by 21% from January to May of this year, compared to the same period in 2021, according to Poten & Partners’ ‘LNG Market Outlook’.
Higher pipeline imports, higher domestic natural gas production, higher coal consumption and production, plus high LNG prices and a slowing economy all contributed to the decline.
Power sector coal consumption from January through April was up 25%, compared to the same time frame in 2020, while coal production rose by about 12%, compared to last year.
Power producers with both gas-fired and coal-fired generation were maximising the coal portion. The switch to coal makes economic sense, due to high natural gas import prices and lower domestic coal prices, Poten said.
Coal prices were lower, due to thermal coal price caps and higher domestic coal production.
The Chinese Government recently announced plans to spend $1.5 bill on increasing coal fired generation to avoid power cuts, and to spend another $15 bill on raising coal output.
Given all these factors, the LNG import forecast was lowered to 74 mill tonnes per annum in 2022 from the previous forecast of 77 mill tonnes. Next year, imports are forecast to grow by 11% to 82 mill tonnes per annum.
Imports from Russia through the Power of Siberia pipeline were 60% higher this year. Gazprom sent roughly 9 bill cu m through this pipeline to China in 2021 and has said that it plans to increase flows to 14 bill cu m this year – only about 40% of the pipe’s total capacity.
Pipeline gas imports from Myanmar and Central Asia were also anticipated to increase. However, pipelines running through Myanmar have been targets of anti-Chinese civilian militias.
Through 1Q22, domestic natural gas production was up 5% at 58.5 bill cu m, compared to the same quarter of 2021.
Higher prices have encouraged domestic producers to increase production, which has exceeded the targets set by the Chinese government.
This trend is forecast to continue throughout 2022 and 2023 with domestic production reaching 230 bill cu m per year in 2022 – up 11% from 2021 and roughly 16 bill cu m higher than the current production targets.
