China Is a Big Variable in the LNG Market

Posted September 9, 2014 at 5:16pm

While Asian markets for liquefied natural gas are expected to grow, with increased shipments to Southeast Asia and India, future demand in China is highly variable, according to market analysts.

China is scrambling to develop its own shale gas resources, which are abundant but are restricted by access to water and infrastructure.

Though the country is forecast to import more LNG than South Korea, its potential domestic supply and other factors make such extrapolations precarious, according to Jane Nakano, an energy fellow at the Center for Strategic and International Studies who formerly worked for the Department of Energy on U.S.-China engagement.

“Its domestic shale gas potential, the future volume of pipeline gas import from Central Asia and Russia, and a notable absence of Chinese investment commitment in U.S. LNG export projects render it difficult for me to envision China becoming one of the largest importers of U.S. LNG,” she told a House panel in May.

While China recently took a step to strengthen ties with Russia, signing a $400 billion deal for natural gas to be delivered by pipeline over the next 30 years, it will still be looking internally and to countries other than Russia for 90 percent of its supply, according to Mikkal E. Herberg, research director of the National Bureau of Asian Research who worked for the ARCO oil company for 20 years.

“The last thing they want to do is put themselves vulnerable to Russian pressure,” he told the House panel.

Herberg said Monday that most analysts guess China could be importing 40 million to 80 million metric tons of natural gas per year by 2025. “But that is a very wide range,” he said.