Oct 16, 2018 (China Knowledge) - China is on track to become the world's largest importer of natural gas this year, overtaking long-standing leaders Japan and South Korea.
The rise in China's imports has had a significant impact on liquefied natural gas (LNG) prices in Asia. Price of LNG has more than doubled to USD 11.20 per million British thermal units (Btu) in July this year from USD 5.45 last December.
China has imported 57.18 million tons of gas from the start of the year to August, overtaking Japan’s 56.45 million tons. The rise in demand from China will greatly impact international trade in LNG as such trades are largely based on long-term contracts. On Monday, Kazakhstan’s national gas shipping company KazTransGaz completed a 5-year deal with China’s Petrol China to double its natural gas exports to the country to 10 billion cubic meters per year.
Natural gas, which is the cleanest source of fossil fuels is set to play a larger role in China’s energy requirements as the country looks to cut down on air pollution. In addition, natural gas is also essential for the development of new energy sources such as solar or wind energy by serving as a backup during certain times when production stalls especially during cloudy weather or lack of wind.
Currently, natural gas only accounts for 7% of China’s total energy supply. In comparison, the average usage for most developed economies stand at around 30%, showing the vast potential in China's natural gas market. China hopes to increase natural gas usage to 10% within the next few years with a longer-term target of more than 15% eventually.
Gas production has also been steadily increasing in China by 9% a year over the past decade. Conversely, crude oil production in the country has remained relatively constant over the same period, showing China's determination in working towards cleaner energy.
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