China's shifting energy mix weakens pillar of global LNG growth

SINGAPORE: For years, China was viewed by liquefied natural gas (LNG) producers as the key driver of future demand growth, helping to justify billions of dollars in export infrastructure investment from the US Gulf Coast to Qatar.
But China's appetite for the super-chilled fuel is flagging, even as producers prepare a wave of new supply in coming years, potentially undermining the viability of some future projects that depend on long-term import needs from Asia and Europe.
The Iran war has triggered the second global LNG supply shock in four years after Russia's Ukraine war in 2022, reinforcing China's drive to prioritise domestic and pipeline gas and renewable energy, relegating imported LNG to a shrinking share of its fuel mix.
'Even after Persian Gulf LNG supply is eventually restored, we expect that heightened energy security concerns in China will result in a more conservative approach towards LNG', said S&P analyst Megan Jenkins.
'This will drive efforts to boost energy self-sufficiency, meaning lower LNG demand compared with our pre-war expectations', she said.
JPMorgan, S&P Global Energy and Wood Mackenzie have cut their projections for China's LNG demand growth in the early 2030s by between 14 million and 22 million tonnes. They now see demand growing by between 19 million and 53 million tonnes from 2025 to the early 2030s.
Top LNG trader Shell's latest outlook has a range of potential outcomes, cutting its low case scenario for imports to peak at 120 million tonnes by 2035 and a high case of near 150 million tonnes by 2040. This compares with a ⁠2024 outlook projecting imports peaking around 2030-2035 at 146 million tonnes. — Reuters