BAKU, Azerbaijan, January 21. China could emerge a key LNG exporter in the longer term incentivised by cross-country arbitrage opportunities in emerging LNG markets, Trend reports via Fitch Solutions.
Emerging LNG import markets in South East Asia and South Asia in
combination with significant demand pull from Europe is presenting
opportunities for China’s LNG exports. Europe could emerge a more
lucrative spot LNG market for China’s LNG players, given the
continent’s growing demand for
gas following loss of Russian supplies, but the levels of LNG
exports out of China will vary depending on its surplus LNG
available for exports, arbitrage price spreads, government’s
approval as well as destination restrictions under the contracts.
In 2022, China’s state-owned and private LNG players including
PetroChina, Sinopec, Unipec, China National Offshore Oil
Corporation, ENN Energy, JOVO Group and Guanghui Energy launched
tenders to sell a large number of spot cargoes against the backdrop
of weak domestic demand,” reads the latest report released by Fitch
Solutions.
The report reveals that in 2022, spot LNG sales could have climbed up to 4mtpa, according to industry estimates. In addition, China’s LNG bunkering industry is taking off allowing it to export LNG in the form of bunker fuel for shipping industry, but LNG bunker sales remain limited to a few major ports including Shanghai, Yangshan, and Zhoushan. Potential for China’s LNG bunker sales to international shipping industry in the longer term is quite significant given its high shipping traffic at its major ports and sustained rise in the number of LNG-fuelled vessels globally, the company believes.
China recorded the largest decline in LNG imports in 2022. Volumes fell 19 percent to 64.13 million tons due to the slow economic growth and COVID-19 restrictions, which had downward pressure on demand. In 2021, China took delivery of 79.3 million tons of LNG and surpassed Japan as the world's largest importer.
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