South-to-North Spread: China LNG Market in Redistributing

In middle October, Kunlun Energy Group Huanggang LNG Company initiates the LNG sales with a covering rage spreading to Henan, Shandong Provinces. China’s LNG resource distribution is changing its pattern by south resource invading north, and the previous traditional transfer routes such as the west-to-east and north-to-south are facing challenges.

China’s LNG market thrives in 2017, with an estimated annual consumption over 19 million mt (98 trillion Btu) or a five-year average growth rate at 34%. Together with the blossom, the regionalization exacerbated simultaneously. A bunch of receiving terminals are put into operation in 2017, bringing a relief to the coastal regions which suffered severe shortage and demanded inland resources beyond measure before. According to SCI, the total capacity of receiving terminals and transfer stations has reached 51.65 million mt per year, and the imported LNG has occupied over 45% of the total LNG sales in China.

Meanwhile, the inland LNG resources retreat back to a radius less than 1,000 km, and the newly-added LNG production capacity grows slower than the consumption growth. The good old days for LNG plants between 2011 and 2014 had past, despite at the time the LNG production capacity grew over 60% per year. From 2015, the growth rate dropped back below 20%, and many plants entered long-term shutdown.

China’s LNG market supply pattern has changed into a emanate mode, taking LNG core plants and terminals as center points, such as LNG plants in Shaanxi to supply Henan and Hubei, or Tianjin Terminal to supply Beijing, Hebei and Shandong. However, currently, the imported low-priced resources are still stuck in southern China or coastal regions but there are no available low-priced resources for Central China. Therefore, the marketing and sales of Kunlun Energy Group Huanggang LNG Company go smooth, or even challenging the traditional supply pattern.