China believes natural gas demand will SOAR

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In the case of natural gas, several important pipelines have been built over the years connecting it with friendlier nations. Imports from Central Asia are facilitated through three major pipes that can transport 55 bcm annually, from Myanmar 12 bcm, and from Russia 38 bcm. Beijing and Moscow are currently also negotiating the Power of Siberia-2 pipeline, which would strengthen the countries’ economic and political relations even further.

LNG, the new game in town

Gas consumption in China has taken a hit due to COVID-19. Consumption grew ‘just’ 1.5 percent in the first six months of this year. However, growth during the summer has picked up again with a 3.9 percent expansion. With the winter insight, growth will most likely maintain momentum. 

Chinese consumers, furthermore, can make use of favorable energy prices for shipped fuels such as LNG. While pipeline imports are slightly down for 2020, LNG is projected to grow by nearly seven percent. Although transportation costs of the former are higher compared to those of the latter, long-term contracts have proven unfavorable compared with the spot market conditions of liquefied gas.

Regardless of future price developments, Chinese companies will increase the use of natural gas in their energy portfolios. Therefore, expect China to remain the focus of energy companies due to its economic potential in a post-COVID world where decarbonization key.

This article was originally published on Oilprice.com