U.S. Gas Sales to China Boom as Buyers Seek to Avoid Pinch

Updated on
  • China’s imports of U.S. LNG surge to record 407,325 tons
  • Shipments rise as distributors seek to avoid gas shortage

China’s imports of liquefied natural gas from the U.S. jumped last month as the country snatched up a record volume of the fuel to meet surging demand for heating and industrial use.

Shipments from the U.S. totaled 407,325 metric tons in November, up from nothing the same month a year earlier and 57 percent from October, placing one of the world’s newest LNG sellers as the third-biggest supplier to China, behind stalwarts Australia and Qatar.

“U.S. exports are ramping rapidly up, while China is the fastest growing importer,” said Kerry Anne Shanks, a Singapore-based analyst at Wood Mackenzie Ltd. “LNG trade between the two countries will continue to grow.”

The world’s largest energy user is struggling with a winter natural gas shortage after demand surged this year amid President Xi Jinping’s fight against smog, which has focused on cutting the use of coal in favor of the cleaner-burning fuel. China’s rising need has helped push spot LNG prices to $10.90 per million British thermal units, the highest in three years, according to industry publication World Gas Intelligence.

To read how China’s push for cleaner air backfired against Xi Jinping, click here.

Increasing U.S. oil and gas supplies to China has been a goal for President Donald Trump’s administration, with energy dominating the $250 billion in deals unveiled between the countries during his visit to Beijing last month. Those included agreements between Cheniere Energy Inc. and China National Petroleum Corp., as well as China Petrochemical Corp., known as Sinopec Group, and Alaska Gasline Development Corp. Neither of those were binding commitments, and Chinese LNG buyers have not yet inked any long-term purchasing or investment deals with U.S. exporters.

Spot Deals

“The U.S. has benefited from a temporary gap that has arisen this year with Chinese gas demand surging,” said Sophie Lu, an analyst at Bloomberg New Energy Finance in Beijing. “Since October, China has accounted for a quarter of U.S. shipments of LNG exports, especially buying uncontracted volumes from the spot market.”

China’s natural gas use could almost triple from last year to about 600 billion cubic meters by 2040, and it could overtake the U.S. as the world’s largest consumer by 2050, according to Sanford C. Bernstein & Co.

Tuesday’s data also showed that Australia remained China’s largest LNG supplier in November at 1.47 million tons, up 12 percent from the same month last year. Other major sellers include:

  • Qatar up 33% year-on-year to 815,118 tons
  • Indonesia up 40% to 336,273
  • Malaysia down 4% to 263,341

China this winter has relied more on natural gas sold in liquefied form delivered aboard tankers than it has on pipeline-delivered supplies. Shipments from Turkmenistan, the biggest supplier via piped gas, totaled 1.59 million tons, up 11 percent on-year but a 7 percent slide from the previous month. Other pipeline suppliers include:

  • Uzbekistan up 70 percent year-on-year to 415,725 tons
  • Myanmar up 29 percent to 294,948 tons

— With assistance by Jing Yang, and Stephen Stapczynski

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