China’s General Administration of Customs just confirmed what liquefied natural gas industry insiders have been speculating for weeks: There’s a new No. 2 in town.
China imported 38.1 million tons of LNG in 2017, according to customs data released Tuesday. That’s more than the 37.6 million tons that South Korea imported last year, according to customs data that country released last week. In 2016, South Korea imported 33.5 million tons to China’s 26.1 million, according to customs data. Japan, the world’s largest importer, had shipped in 72.3 million tons through the end of November, according to government data.
China’s surge stems from President Xi Jinping’s efforts to clean the air in smoggy cities by replacing coal-burning furnaces with cleaner natural gas. The push resulted in winter gas shortages in parts of the country where infrastructure wasn’t prepared to handle the increased demand. Additional LNG buying has also inflated spot prices, which have more than doubled since June to $11.40 per million British thermal units, according to industry publication World Gas Intelligence.
Gas consumption in China is expected to continue its rise as the government still has room to improve air quality, Sanford C. Bernstein & Co. analysts including Neil Beveridge said in a Jan. 18 research note. China could overtake Japan as the world’s No. 1 LNG importer as soon as 2025, according to Bloomberg New Energy Finance forecasts.