BAKU, Azerbaijan, February 28. China's liquified natural gas (LNG) demand is expected to reach 94 billion cubic meters (bcm) in 2023, which is an increase of 10 percent, or 8 bcm, year-on-year, Trend reports via the latest gas market overview from the International Energy Agency (IEA).
As the agency explained, growing number of COVID-19 cases may pose risk to the demand growth, but, at the same time, China's growing portfolio of LNG contracts means that the country’s demand for LNG in 2023 may be more resilient and less exposed to the impact of spot market prices and volatility than it was before 2022.
"With about 13 bcm of new LNG contracts starting delivery in 2023, China’s contracted LNG volume is on course to reach nearly 110 bcm this year, substantially higher than projected LNG demand in all but the most optimistic scenarios (and slightly higher than China’s total LNG imports at their 2021 peak of 108 bcm). This means that in 2023 China could ramp up its LNG imports back to 2021 levels without the need to increase spot LNG purchases," the IEA noted.
The IEA pointed out that China’s demand for imported LNG is among the biggest uncertainties for 2023, not only for the global LNG market, but also for the availability of gas supplies to Europe in the face of a significant reduction in pipeline gas supplies from Russia.
Net LNG imports into China plummeted by an unprecedented 21 percent, or 22 bcm, in 2022, compared to a 17-percent increase (16 bcm) a year earlier.
"This reduction played a crucial role in enabling a 63 percent (65 bcm) increase in LNG inflows into Europe to compensate for the lost Russian volumes. However, the 2022 collapse of Chinese LNG demand was precipitated by a unique set of factors – namely high spot LNG prices, slowing economic growth, and lockdowns under China’s strict zero-Covid policy – that are unlikely to be repeated in precisely the same combination in 2023," the report concluded.
The IEA's analysis shows that a set of assumptions about total gas consumption in China, domestic production and pipeline gas imports could reduce the demand for LNG in the country by another 12 percent (10 bcm) in 2023, while a combination of moderately optimistic conditions could increase China’s LNG consumption by 35 percent (30 bcm) well above its previous peak in 2021.