China’s Winter Spot Demand to Disappear on Term Contract Changes

Although LNG imports for China may have declined 9% to 7.8 MMt during the first five months of the year, weaker gas demand is not the only factor involved. Lower imports also appear to be a result of changes to existing supply contracts to shift more volumes to meet winter demand. It is likely that this year’s total imports could still end higher than a year ago as imports rise in the second half of the year especially in the winter. Another change in the works will see Australia reclaim its position as the largest LNG supplier to China next year as new contracts ramp up. Should the four contracts commencing this year reach their full volumes in 2016, Australian supply could exceed 15 MMt. Imports from Australia peaked at 3.9 MMt in 2010 and were 3.8 MMt last year, with the majority from CNOOC’s 3.7 MMt/y contract with North West Shelf. Click here to read full article