LNG Terminals And Trade In China
Most Recently Updated Pages
Prelude Floating LNG Terminal
Probably the most exciting project in the world of Oil & Gas. The platform will be the largest ship ever built
- Robust growth in natural gas demand in recent years, particularly in the urban coastal areas, has led China to become the third largest LNG importer and to accelerate development of its LNG and pipeline infrastructure.
- Since the country built its first regasification terminal, Guangdong Dapeng Lng Terminal, in 2006, natural gas imports have risen dramatically, making China one of the largest LNG consumers in the world. Roughly half of China's total natural gas imports were in the form of LNG in 2012.
- In 2012, China imported 706 Bcf, a 20% increase from 581 Bcf in 2011. Data estimates for 2013 show LNG imports climbing even higher to 749 Bcf for the first 11 months of the year. China, consuming over 6% of the global LNG trade, quickly became the world's thirdhighest LNG importer, exceeding Spain for the first time in 2012.
- Import regasification capacity was 1.5 Tcf/y (4.1 Bcf/d) by the end of 2013, and another 2 Bcf/d is being constructed by 2016. LNG now enters the country through nine major terminals, with another five under construction and more in various stages of construction and planning. China's LNG imports are expected to increase as more terminal capacity comes online, although higher market-based LNG prices compared to lower prices from domestic gas sources and the increasing pipeline gas supplied by Central Asia could lead to more competition for LNG imports.
- CNOOC is the pioneer of developing LNG regasification terminals and remains a key LNG player in China. The NOC operates six existing plants, including the Ningbo terminal at Zhejiang and the Zhuhai terminal, both of which came online in 2013. The company has held a competitive advantage thus far in China's LNG market compared to the other NOCs and continues to expand aggressively.
- CNOOC completed construction of China's first floating storage and regasification unit (FSRU) in Tianjin at the end of 2013. Generally, floating terminals are more expensive to build, but they can be developed more quickly than land-based terminals. China's rapidly growing demand and need for seasonal flexibility makes the floating terminals attractive.
- CNOOC is constructing two regasification terminals in the southern region — Hainan and Shenzhen/Diefu — and intends to expand four of the company's existing terminals. In addition, CNOOC has proposed two other FSRU facilities that are scheduled to come online in 2014.
- CNPC recently entered the LNG market and commissioned its first two regasification terminals, Dalian and Jiangsu, in 2011. The company's Tangshan terminal came online by the end of 2013. Sinopec anticipates entering China's LNG market with the advent of its Qingdao terminal in 2014.
- Chinese NOCs must secure supply prior to gaining government approval to build a regasification terminal, and these firms are faced with competition from other regional buyers, mainly those in Korea and Japan. Chinese companies have signed long-term contracts to deliver at least 5.2 Bcf/d through 2030. Most of these contracts are with Asian firms sourcing LNG from Indonesia, Malaysia, Australia, and Papua New Guinea (PNG). Some contracts are tied to new liquefaction projects primarily located in Australia and PNG and slated to come online after 2014.
Investing in Supply
- In addition to purchasing supply, Chinese companies are investing in significant equity stakes in Australia's liquefaction projects, particularly ones involving coalbed methane. CNOOC owns a 50% stake in the Queensland Curtis LNG Terminal, and Sinopec owns 25% of Australia Pacific LNG. Both of these terminals are scheduled to begin operations and supply natural gas to China by 2015.
- To meet its rapidly growing demand, China is diversifying its LNG imports from other regions such as the Middle East and Africa. Qatar, which ships gas to China under longterm contracts and spot cargoes, supplied LNG to meet more than a third of China's demand and was the largest LNG supplier to China in 2012. Also, some long-term contracts involve gas supply from global LNG portfolios of major international oil companies. China started actively seeking potential LNG opportunities from North American shale gas plays by investing in upstream developments and LNG projects in Canada. CNPC owns a 20% share in the LNG Canada project, and CNOOC, through its wholly owned Canadian company, Nexen, recently purchased land in western Canada to explore opportunities to develop a liquefaction terminal.
- China's higher gas demand and a tighter LNG global supply market over the past few years have led to an increase in LNG import prices. According to PFC Energy, the average LNG import price was $10.43/MMbtu for all terminals in 2012, although import price for terminals that came online in the past two years were much higher. Also, as China has diversified its import sources to include more LNG from the Middle East and Africa, costs have increased. Average prices to import LNG at certain terminals, such as Jiangsu and Dalian, are over $17/MMbtu, which more closely reflects the higher Asian LNG prices, tied to international oil prices.
LNG Terminals and Projects
page revision: 6, last edited: 17 Dec 2014 09:41