China Energy Demand Rising

China Energy Demand Rising
China Energy Demand Rising

While it is true that China's crude oil imports recovered slightly in July, it was still among the lowest so far this year due to a decline in demand from smaller independent “teapot” refineries.

However, according to Oil Price, for the first seven months of the year, China imported 8.98 million barrels per day of crude oil, up 5.6% from a year earlier.

Total natural gas imports, including both pipeline gas and liquefied natural gas, rose to 7.38 million tons during the same period, up 28.3% from a year ago, according to customs data.

Amid both economic growth as well as Beijing’s mandate that gas make up at least 10% of the country’s energy mix by 2020 to offset the effects of rampant air pollution from dirtier thermal coal power production, the long-term trajectory for both China’s natural gas consumption, as well as oil usage, will continue to increase, posing both a geopolitical and financial dilemma for the country that the US and many western powers grappled with for decades.

Going forward, China’s gas demand is projected by the IEA to rise by 60% between 2017 and 2023 to 376 billion cubic meters, including a spike in its LNG imports to 93 bcm by 2023 from 51 bcm last year. The IEA has also projected that China will become the world’s top natural gas importer of both pipeline and LNG by next year. The marked increase in Chinese LNG procurement has changed the global LNG market from one that was projected to remain in a supply overhang scenario until around 2022 or even later to one that is now projected to have possible shortfalls of the super-cooled fuel around the same timeframe.

It has also ushered in new confidence for global LNG producers and talk of pushing ahead more greenfield LNG projects to meet this demand, a possibility unheard of just a year ago.


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