SCI View: Shanghai LNG Expansion to Start

SCI View: Shanghai LNG Expansion to Start, Boosting Energy Security

Shanghai is set to commission a major expansion of its LNG import facilities, solidifying LNG’s dominance in its energy mix and upgrading the city’s peak-shaving and emergency response capabilities. The project will also enhance synergy with other gas sources, strengthening energy coordination and structural optimization across the Yangtze River Delta.

According to recent statements from Shenergy Group, the Shanghai LNG Terminal Expansion Project (Phase I) is nearing completion and is scheduled to begin gas supply by year-end. Final commissioning is expected by the end of November, followed by trial operations, ensuring a more robust natural gas supply for Shanghai this winter.

Project Overview

Table 1: LNG Terminals in Shanghai

LNG-Dependent Supply System

Despite being at the far end of long-distance pipelines, Shanghai has built a comprehensive self-sufficient natural gas supply system. This includes multiple pipeline sources and local LNG terminals.

LNG reception forms the backbone of Shanghai’s gas supply. Unlike most Chinese provinces, where NOCs dominate supply, over half of Shanghai’s natural gas is sourced from imported LNG. In 2024, the Yangshan and Wugaogou LNG terminals imported 3.86 MMt and 1.22 MMt, respectively, accounting for approximately 60% of the city’s total consumption, a share that has consistently ranged between 55-65% over the past five years.

Strategic Impact

1. Enhanced Supply Security & Peak-Shaving

Upon startup, the expanded Yangshan terminal’s total capacity will surpass that of Zhoushan ENN, ranking it first among China’s second-tier LNG operators. The project will improve coordination with other gas sources, bolstering storage, emergency backup, and peak-shaving capacity. This will provide stronger support for managing demand fluctuations and ensuring gas supply stability.

Furthermore, the project will ensure a stable feedstock supply for LNG bunkering at Shanghai port, a key international and domestic hub. Two of China’s five LNG bunkering vessels currently serve the port.

Shenergy Yangshan LNG Co., a joint venture of Shenergy Group (60%), Zhejiang Energy Group (20%), and CNOOC Gas & Power (20%), will not only secure supply for Shanghai but also promote regional energy synergy. The partners’ combined international resource portfolios and established downstream channels in the Yangtze River Delta create a strong foundation. This collaboration model leverages respective strengths, mitigates market risks, and enhances supply stability for the broader region. This momentum will be further strengthened by the upcoming expansions, including the third phase of CNOOC’s Ningbo terminal, the first-phase expansion of the Binhai terminal, and Zhejiang Energy’s Liuheng terminal, all slated for commissioning by 2028.

2. Price Stability for End-Users

Since October 2022, Shanghai has implemented a price linkage mechanism for non-residential gas users. While benchmark prices have undergone several adjustments, the overall trend has been downward, aided by falling international prices and secure supply.

For example, the price for chemical industry park users supplied directly by the city gas company in Nov-Dec 2025 fell approximately 16.79% compared to the same period in 2022 and dropped about 6.21% year-on-year.

The new terminal will further enhance local gas reserves and peak-shaving capacity, mitigating seasonal tightness and curbing price volatility. It will also strengthen Shenergy’s self-supply capability, reducing reliance on long-distance pipelines and insulating the city from broader domestic supply-demand swings.

Globally, with structural optimization in Europe, Japan, and Korea, coupled with a wave of new LNG export project startups in the next two years, spot prices are expected to enter a downward cycle. Increased receiving capacity will provide greater flexibility in international procurement, allowing buyers to optimize import costs and underpin end-user price stability.

The startup of the Shanghai LNG terminal expansion will significantly boost receiving and storage capacity, enhance supply coordination, and fortify the city’s energy security, providing lasting support for stable end-user prices and injecting robust, low-carbon momentum into the region’s economic development.

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