China is rapidly becoming the world’s most dominant force in liquefied natural gas, with Chinese buyers accounting for 40% of recent long-term LNG contracts among global players, according to Nikkei Asia.
Take Chinese energy giant Sinopec Group, which reached a 27-year agreement with state-owned QatarEnergy late last year to buy 4 million tonnes of LNG annually. The imports are due to begin around 2026. As a key client, China is also negotiating to invest in a massive Qatari project to expand LNG output.
At the same time, a private-sector Chinese energy company, ENN Group, signed a contract last year with Texas-based Energy Transfer to buy 2.7 million tonnes of LNG annually for 20 years. ENN increased its purchasing agreement with NextDecade, also headquartered in Texas, to 2 million tonnes a year for 20 years as well. In addition, NextDecade has agreed to supply 1 million tonnes of LNG yearly to China Gas Holdings, whose principal shareholder is an investment vehicle controlled by the city of Beijing. Imports are to start in the latter 2020s.
Over 2021 and 2022, China closed long-term LNG purchasing contracts worth nearly 50 million tonnes a year, European research firm Rystad Energy reports. In this not so covert attempt to corner the LNG market, China has tripled the scale of purchases through long-term contracts in just two years, up from the annual volume of roughly 16 million tonnes from 2015 through 2020.
Amid global efforts to reduce carbon emissions, many countries have converged on natural gas as a relatively clean bridge fuel. The Institute of Energy Economics, Japan predicts annual worldwide LNG demand will reach 488 million tonnes in 2030, up about 40% from 2020. But global supply is on track to fall short of demand by 7.6 million tonnes a month in 2025.
