Chinese gas demand to rise; will help to ease glut – IEA
TOKYO, Nov 24 (Reuters) – China’s gas demand will grow significantly and may help to speed up the end of the current global liquefied natural gas (LNG) glut, the director of the International Energy Agency (IEA) said on Thursday.
China imported 1.84 million tonnes of LNG in October, up 15.1 percent from a year ago, customs data showed on Thursday. Chinese imports over the first nine months of 2016 were 17.87 million tonnes, up 26.5 percent over the same period in 2015.
In contrast, LNG imports to Japan, the world’s biggest buyer of the fuel, dropped to 61.96 million tonnes in the first nine months of the year, down 3.5 percent from year-ago levels.
Purchases for South Korea, the world’s second-biggest LNG importer, have also declined, falling 5.8 percent in the first nine months of the year.
"When you look at the global energy mix today, the share of gas is about 25 percent. And in China, it is about 5 percent. There is a big difference there, and what we expect is the Chinese gas market will grow significantly," IEA Executive Director Fatih Birol told Reuters in an interview on the sidelines of an energy conference.
China’s demand could boost the market but it remains stressed by oversupply. Mohammed al-Sada, energy minister for top LNG exporter Qatar, on Thursday at the conference acknowledged that the global LNG price is projected to stay under pressure over the short- to medium-term as additional U.S. and Australian production capacity come online.
The growth in those supplies means traditional trade flows such as Qatari exports to Asia could end up being diverted to other destinations, PIRA Energy’s head of global gas and power, Ira Joseph, said in an interview earlier this month.
But, Chinese consumption growth could lead to the LNG market becoming balanced sooner, said Birol
"If we see a major increase of gas in China, this will definitely be impacting the Asian and global gas markets given the sheer size of China," said Birol during the interview. "Currently we see gas glut in the market and if China’s appetite is bigger than today, it may well end up with the glut to come to an end earlier than otherwise expected."
The deepening supply glut has reduced buyers’ interest in signing traditional long-term contract since there is little value in committing to volume with ample supply options available.