China’s giant state LNG importers are in talks to secure long-term LNG supplies from exporters that don’t need the Strait of Hormuz, as the world’s biggest LNG buyer seeks to reduce its exposure to gas deliveries from the Persian Gulf, sources familiar with the plans told Bloomberg on Friday.
China is the top LNG customer of Qatar, and it sourced nearly 30% of its LNG supply from the Gulf exporter last year.
But as the Middle East conflict erupted and led to the closure of the Strait of Hormuz and damaged Qatari facilities, imports into China have crumbled.
In the second quarter of this year, China imported only about 100,000 tons of LNG from Qatar, down from as much as 4.7 million tons in the same period last year, according to ship-tracking data compiled by Bloomberg.
Some of China’s state-controlled majors have signed long-term deals in recent years with Qatar in exchange for minority stakes in some of the expansion projects of the Gulf producer, part of which will be delayed due to the war.
China will not be seeking to cancel its binding contracts with Qatar, according to Bloomberg’s sources.
But Beijing is exploring options to reduce its exposure to Gulf supply. Some of the biggest Chinese LNG buyers, including PetroChina and Sinopec, are in talks with exporters for potential deliveries starting before 2030 for a period of at least ten years, the sources told Bloomberg.
Canada is one option, according to one of these sources.
Canada is vying to boost its energy exports to Asia in its quest to become an energy superpower and diversify its energy exports away from too much dependence on the United States.
China’s dilemma in non-Hormuz LNG sourcing is that it would likely prefer to avoid dependence on U.S. LNG export volumes amid trade and tariff policy uncertainties under U.S. President Donald Trump.
By Charles Kennedy for Oilprice.com
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