Home Business China soon to be No.1 LNG importer – Beijing hungry for LNG – News

China soon to be No.1 LNG importer – Beijing hungry for LNG – News

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China soon to be No.1 LNG importer – Beijing hungry for LNG – News

China actually did Europe a big favor with the tough economic lockdown: Because the economy was partially at a standstill, China imported significantly less liquid gas in 2022. This has helped keep gas prices moderate. But now Beijing is ramping up the economy again.

China is currently securing liquefied natural gas, so-called LNG, from all over the world. According to the Bloomberg news agency, China has signed 15 percent of all LNG contracts that will start to run in the next five years.

According to Bloomberg, China will soon overtake Japan as the world‘s largest LNG importer. At the beginning of the week, the international energy agency IEA warned that Europe could lose out when it comes to liquid gas imports. As a reminder, it is LNG imports that have largely replaced Russian pipeline natural gas in Europe.

Europe’s fears of gas shortages exaggerated

The economist Christof Rühl, who teaches at the Center for Global Energy at Columbia University in New York and was previously chief economist at the oil company BP, believes that fears of new gas bottlenecks are exaggerated. Because: “China buys, that’s right, but they’ve always done that because security of supply is very important,” says the energy economist.

There is also a second reason why China is currently concluding a large number of long-term supply contracts: “Long-term contracts are easier to calculate and prices are currently low.”

In the long term, China will switch to its own reserves.

Christof Rühl assumes that gas prices will be low over the summer and then rise again somewhat in winter. The experts do not agree on what level, however, because a lot depends on how strong the economy in China will grow.

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In the longer term, however, Christof Rühl is not particularly worried about Europe and its gas requirements. Because it is often forgotten that China is sitting on large shale gas reserves: “China has more shale gas deposits than the USA.” But there are various reasons why these shale gas deposits have not yet been tapped.

It must be assumed that this treasure will be unearthed in the future and China will therefore be relatively independent of gas imports.

Political reasons are, for example, that the shale gas deposits are located in Chinese regions whose local governments do not want to work with the centrally controlled oil and gas companies. The gas price in China is also still state-regulated, so it is very low and the initial investments for the development of shale gas deposits are therefore not yet worthwhile, Christof Rühl continues.

“One has to assume that this treasure will be unearthed in the future and China will therefore be relatively independent of gas imports,” Rühl continues.

More gas – less coal

And this desired independence from LNG imports also explains why China is securing more liquid gas no matter what, because the economy wants to switch to more gas and less coal.

China is still building many coal-fired power plants, but the demand for coal in Chinese energy consumption is falling – and that for gas is rising.

Good news for Europe

Of course, in absolute terms, coal and gas consumption will continue to grow as the Chinese economy grows. But that applies to the whole world, also with regard to the energy transition.

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In any case, it is good news for Europe that China will eventually be self-sufficient in terms of gas, even if it will take a few more years. Because it allows more ships with LNG on board from the Middle East, Africa and the US to unload at European LNG terminals.

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