Yangtze River Delta LNG Supply and Competition Analysis

SCI99

2020-02-17

Yangtze River Delta LNG Supply and Competition Analysis

In recent years, amid the accelerating adjustment of energy structure and the promotion of environmental protection, the demand for LNG continues growing. According to data, the apparent consumption volume of natural gas will reach 310 bcm in 2019, up around 10% Y-O-Y. In addition, LNG consumption volume in the Yangtze River Delta region was 6,440kt, accounting for 23% of the total. As the first one to use natural gas in China, the Yangtze River Delta region attached the highest natural gas consumption volume in China.

At present, the Yangtze River Delta region’s LNG supply was mainly from CNPC Rudong, CNOOC Ningbo, Guanghui Qidong, ENN Zhoushan, Shanghai Wuhaogou and Shanghai Yangshan with the total receiving capacity of 18,150kt/a, accounting for 25% of the total. Additionally, CNOOC Binhai, Sinopec Lianyungang, and CNPC Dafeng are under construction, and CNPC Rudong and Guanghui Qidong are being expanded.

Except for terminals, some LNG plants supply the Yangtze River Delta region, such as Shandong Zaozhuang Xueneng LNG Plant, Jiangsu Xuzhou Dongxing LNG Plant and Hubei Kunlun Huanggang LNG plant. However, 90% of LNG supply in the Yangtze River Delta region is from terminals, and only about 10% comes from LNG plants.

In terms of the downstream consumption structure, the consumption volume of industrial gas ranked first and accounted for 75%. In 2019, LNG price declined by 11% Y-O-Y, pushing up the downstream demand, and NGV consumption growth rate trended up. Compared with alternative energy sources, LNG occupies an absolute advantage due to its economic stability, which promotes a slight increase in industrial demand. In addition, the temperature stayed at a high level in the winter heating season, and pipeline gas supply was relatively sufficient. Therefore, the demand for city gas peak-shaving went down significantly.

According to data, the annual supply volume of LNG terminals in the Yangtze River Delta region is 5,860kt. Zhejiang Province ranks first with the proportion of 55%, and Jiangsu Province ranks second, account for 22%. Taking Jiangsu Province as an example, CNPC Rudong and Guanghui Qidong LNG terminals accounted for 93% of the total in Jiangsu Province, and there are few resources from other provinces. Except for Shanghai Wuhaogou, Sinopec Qingdao can cover northern Jiangsu Lianyungang, while few resources come from domestic LNG plants. The competition in Jiangsu is fierce, and Shanghai and Zhejiang also have similar competition situation. On the whole, there are many LNG competition subjects in the Yangtze River Delta region without dominant upstream suppliers, and the Yangtze River Delta region is highly market-oriented.