China's Gas Imports Still Falling Despite Demand Uptick

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Latest government figures show that China's apparent natural gas consumption rebounded in October, yet imports continue to tumble as high prices and the country's strict "Zero Covid" policies weigh on economic activity.

Higher seasonal demand helped propel China's apparent gas consumption to 30.53 Bcm in October, according to data from China's National Development and Reform Commission. That marks a 9% increase from September — the weakest month so far this year — and nearly 2% increase over October 2021.

However, year-to-date consumption through October remains muted. Apparent gas consumption of 299.93 Bcm over the 10-month period marks a 1.1% year-on-year decline.

Imports Sink

Weak Chinese economic activity and Europe's willingness to snap up ultra-high priced spot LNG to replace Russian gas have muted China's appetite for gas imports and will potentially unseat it as the world's largest importer of LNG.

China's gas imports declined for 10 consecutive months this year, according to Chinese government data. Latest figures put China's LNG imports at 50.51 billion cubic meters across January-October — a sobering 21.6% decline from the same period of 2021 (see graph below).

Dim Demand

Tepid demand is set to make 2022 the first year in China's history in which its natural gas consumption will decline, an official with China National Petroleum Corp. (CNPC) told a recent conference. That compares to average annual consumption growth of 13% between 2005 and 2021.

Chinese industry sources have told Energy Intelligence they see little indication that the country's gas and LNG demand will rebound next year. Even more optimistic observers say any growth will likely be modest.

“There are few signs these trends will change in the near term, barring a very cold winter that could lead to a small uptick in gas — and likely LNG — demand,” concurred the Oxford Institute for Energy Studies in a report. The think tank expects Chinese gas consumption to rise next year as economic activity slowly restarts but agrees that overall demand is likely to remain weak next year.

The decline in consumption has also led to delays in the construction of LNG infrastructure in the northern Chinese cities of Tianjin and Shandong.

New Infrastructure

Separately, news came out this week that China's Shenmu-Anping coal-bed methane pipeline has been fully commissioned and began trial shipments.

China National Offshore Oil Corp. (CNOOC) has said the line can deliver 5 Bcm of additional gas to the Beijing-Tianjin-Hebei region annually once fully commissioned and should deliver roughly 500 million cubic meters this winter and the upcoming spring.

The nearly 623-kilometer line will ultimately be connected to PipeChina's Tianjin LNG and Cangzhou LNG receiving terminals, allowing it to transport domestic coal-bed methane gas output and seafaring imports.

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