Post-Lockdown Economic Growth Returns China to Top of World LNG Importers

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Editor's note: This article contains updates.

Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--In 2023, China passed Japan in liquefied natural gas (LNG) imports, becoming once again the world's top nation in that category, according to Jiaxin Yang of RBAC Incorporated, a supplier of global and regional gas and LNG market simulation systems.

China's COVID-related lockdowns tailed off in late 2022, and as citizens returned to commerce and travel, the nation's natural gas consumption rose by almost 8% in 2023, Jiaxin reported. That level approached the 9% growth rate last seen in the pre-pandemic year of 2019.

Although China receives natural gas from overland pipelines as well as through LNG imports, the overall recovery in gas demand pushed imports up by 18% year over year. That's the opposite of what happened in 2022, when imports dropped a whopping 24% compared to 2021 levels. Imports in 2023 reached 72 million tons, leaving Japan's 66 million in second place.

Because China shares a border with gas-producing Russia, the former is able to receive much of its gas by pipeline, a luxury not shared by the island nation of Japan nor the peninsula of South Korea. China also produces some of its own natural gas. Jiaxin noted that 2023 saw an increase in pipeline imports, leaving the relative percentages of LNG and pipeline gas unchanged.

Regarding the future of pipeline imports, he added, "Due to the relatively low absolute cost of pipeline gas, it is possible that with geopolitical changes, if (the) Power of Siberia 2 pipeline is successfully put into operation in the 2030, there will be a large increase in pipeline gas imports in the future."

Where Chinese LNG Comes From
RBAC notes that China's top LNG sources are Qatar (17 million tons per annum [mtpa]) and Russia (8 mtpa), and trade with those nations is on the rise. Still, China gets about half its LNG from Southeast Asia (12 mtpa), particularly Malaysia. The U.S. share of China's market has dropped since the start of the Russia/Ukraine conflict, totaling 3 mtpa) in 2023.

Japan relies on Australia and Southeast Asia/Malaysia for 66% of its imports, the report said. A recent Reuters article noted that Japanese LNG imports decreased by 8% last year compared with 2022 numbers. Reuters attributed that to the restarting of more of the 54 nuclear reactors that were shut down in 2015 after the Fukushima tsunami. Eleven of the 12 that have been cleared are operating now. There also has been a significant increase in wind and solar power in the last year.

Reuters adds that the U.S. is Japan's fourth largest LNG supplier, and that the nation has expressed concerns about the Biden administration's recent slowdown on approval of new LNG facilities, as that could lead to higher prices and less availability in the future. While Japan's LNG imports from the U.S. increased by 34% in 2023 compared to the previous year, the U.S. number accounted for less than 9% of the total that year, while in 2021, the U.S. supplied 10% of Japan's imported LNG.

Supply issues could also come into play in a larger context for Japan, as Jiaxin sees a more diverse marketing plan for the nation. While the nation is pushing a switch from gas to cleaner fuels, Jiaxin said, "Japan may end up participating more in the global trade of LNG than simply being an LNG importer and consumer."

China's LNG growth opportunities abound, said RBAC. "With the (slowing) growth of natural gas in Japan and South Korea, China will remain an important pillar of growth over the next five years." That growth could come through LNG, pipelines or some combination of both.

The U.S. Role
From the U.S., Reuters quoted global financial infrastructure and data provider LSEG (London Stock Exchange Group plc) December data showing Europe was the number one destination for U.S. LNG, taking 67%. Asia as a whole accepted 26.6% of U.S. LNG shipments. Latin America accounted for 6%.

LSEG noted that the Europe numbers were down in December compared to November, due primarily to warmer-than-normal weather at the end of the year.

Overall, U.S. LNG production surged in 2023 compared to 2022, making it the world's top LNG exporter, over Qatar and Australia. Much of the increase was attributable to the restarting of the Freeport LNG plant that was shut down in 2022 due to a fire. That plant accounts for a large percentage of U.S. LNG exports.

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