A cold winter in China could be signaling a hotter market for a new wave of US natural gas exports sooner than expected.
Cheniere Energy CEO Jack Fusco said Chinese demand for liquefied natural gas was up 40% year-on-year and should continue to be strong. He said the growth in demand is about the size of Cheniere, CNBC reported.
"As we saw this winter, demand in Asia and China kind of surprised the market. What we saw was supposed to be a market that might not be hitting supply-demand balance until the mid-2020s," said Kevin Brown, research analyst at Tortoise Capital Advisors.
"It is at a place now where we see the balance coming maybe earlier, in the 2020s, pushing people to have to make that second wave of LNG investment."
Since Cheniere's first LNG shipment went to Brazil two years ago, there is an even split between destinations in Latin America and Asia, and then the rest of the world.
But every spare drop went to China recently, Fusco told the CERAWeek annual energy conference hosted by IHS Markit in Houston this week.
Fusco said there's secular change in China behind the demand growth.
"They want—they need—cleaner air, and we see that shift longer term," he said.
China's goal is to use natural gas for 10% of its needs by 2020 and it needs LNG to meet that demand.
The United States is a key market to provide new sources of fuel for China. Cheniere Energy last month signed the first-ever long-term deal with a Chinese state-owned energy company, a major step forward for the industry.
"In the US, we have a low-cost, abundant, diverse resource base with large growth that we see coming down the pipeline," Brown said.
Tortoise is one of the largest shareholders in Cheniere.
Brown said the United States also has the largest infrastructure in place.
"We have the workforce and we have been building out these gas-processing facilities, these pipelines and all the infrastructures that is required to really support the big LNG boom that we expect to see in the second wave of LNG in the US," he said.
