China’s imports of liquefied natural gas this month are likely to be unchanged on last year’s, Kpler has forecast, seeing arrivals of a total of 5.29 million tons, as cited by Bloomberg.
The June total, however, would be an increase on May LNG imports, which stood at 4.9 million tons, as demand growth intensifies, driven by air-conditioning in the summer. The May figure was a reversal of import trends from the previous few months, which booked a series of declines amid crimped supply from the Middle East that led to significantly higher prices, dampening importers’ appetite and greater use of coal for power generation. China’s April LNG imports were the lowest since 2018.
According to Kpler, demand for liquefied gas in China will remain robust over the third quarter as inventories drain to respond to demand. As of the end of May, the analytics firm says, China’s LNG inventories were 46% full, which was below the five-year average. Domestic production has also weakened, driving higher demand for imports. In the fourth quarter, however, Kpler expects a recovery in domestic supply and moderating demand after the end of the summer heat.
Unlike other big Asian LNG importers, China is relatively insulated from major supply shocks thanks to its abundant pipeline gas supply—which is also cheaper than LNG – and its unshakeable reliance on coal despite its transformation into the world’s biggest solar and wind energy market.
Yet China is not keeping all its eggs in one basket, and earlier this month reports said it was preparing a new LNG import terminal where it would receive cargoes from Russian Novatek’s Arctic LNG 2 project. The facility is under EU sanctions, but China has repeatedly stated it would not comply with these sanctions. The new terminal should be ready to enter operation by October this year, ahead of the demand surge in winter.
By Irina Slav for Oilprice.com
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