China's LNG Demand Falls
China's import of liquefied natural gas (LNG) fell 1.1% in 2015, marking the first year-on-year decline since imports began in 2006, according to a report by the US Energy Information Administration (EIA).
Chinese LNG imports have grown steadily in the last 10 years, from 0.1 billion cubic feet per day (Bcf/d) in 2006 to 1.3 Bcf/d in 2010, and have more than doubled since then. They reached their peak in 2014 at 2.7 Bcf/d, making China the third-largest LNG importer globally after Japan and South Korea, EIA said in the report.
In 2015, however, LNG imports declined 0.1 Bcf/d to 2.6 Bcf/d, reflecting in part a slowdown in the growth of the Chinese economy and lower prices of competing fuels, EIA said.
China has 13 LNG import terminals in operation with a combined capacity of 5.4 Bcf/d. Several more terminals, with a combined capacity of 3.4 Bcf/d, are under construction and scheduled to start up over 2016-2019.
Analysts at the EIA blamed the drop on both a general slowdown in the Chinese economy, and lower prices of competing fuels in the country. They noted for example, that many Chinese factories that use LNG can also run on liquefied petroleum gas (LPG) — a commodity that has become notably cheaper than LNG of late.
The long term picture is far from rosy either with China's powerful National Development and Reform Commission downgrading its forecast for future gas demand by 14 per cent late in 2014.
LNG exporters are dealing with major Chinese oil and gas companies postponing contracted deliveries and instead buying lower-priced spot cargoes.
