Copyright of the Daily Oil Bulletin 2018
China Unlikely To Repeat LNG Import Surge This Winter
(Reuters) — China is unlikely to see a repeat surge in LNG imports this coming winter as the world's largest energy consumer has learned from the previous cold season to keep demand under control, the head of Unipec said on Tuesday.
"Last year was a special year," Chen Bo, president of Unipec, the trading arm of China Petroleum & Chemical Corp., or Sinopec, told delegates at the LNG Forum in Singapore, referring to government policies that caused China's LNG imports and prices in Asia to soar last winter.
China overtook South Korea as the world's second-largest LNG importer in 2017 with imports of 38 million tonnes, 46 per cent higher than a year prevous. The imports soared after the government ordered millions of homes to switch to natural gas and electric heating from coal to counter rising air pollution.
"We didn't have the experience before to deal with such a situation," Chen said. This year, "demand will increase but the government and companies will control," he added.
The surge in gas demand caused by the government switching policy created a shortfall in supply that caused interruptions in shipments to industrial customers as gas was diverted to residential users.
Chinese companies have announced plans to secure more gas ahead of next winter.
Sinopec said in early April that it will increase its natural gas supplies significantly in the next six years and also plans to more than double its liquefied natural gas receiving capacity in the next six years to 26 million tonnes on an annual basis.
PetroChina is filling up underground gas storage in southwest China with supplies from central Asia and Myanmar.
CNOOC Limited has also issued a tender seeking LNG cargoes for delivery for up to 2022.
Chen said he sees sufficient LNG supplies in the market and Unipec has the flexibility to source supply from various countries.
"For example, we can get supplies from the Qatar expansion, increase supplies from Australia, plus there is fantastic supplies from America," he said.
Sinopec operates three LNG receiving terminals in Qingdao, Beihai and Tianjin, each with a import capacity of three million tonnes per annum.
The recently opened Tianjin facility received its first commercial cargo in February from Australia.