LNG Demand in China and India Could Surge When Prices Normalize
UK Oil and Gas Group Says Earlier Tax Shift Could Raise £14.9 Billion The model covers electricity-system costs… What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Depressed LNG demand in recent months in China and India is the result of spiking LNG prices due to the Middle East conflict, and consumption in the key Asian gas import markets is set to rebound once the war ends and prices normalize, industry executives say.
The war in Iran and the closure of the Strait of Hormuz have choked LNG supply out of Qatar and the United Arab Emirates (UAE).
Persian Gulf producers have managed to find workarounds for oil deliveries, including shuttle-shipping crude out of the Strait and then transferring the cargo onto other vessels offshore Oman.
But LNG flows have remained non-existent or very low, due to the physical and chemical difficulties in ship-to-ship (STS) transfers of the liquefied natural gas.
Some LNG shipments are estimated to havemoved out of the chokepointin recent weeks, as carriers loaded from Qatar and the United Arab Emirates in the Persian Gulf have transferred their cargoes onto other vessels outside the Strait of Hormuz.
These rare cargoes haven’t offset the massive supply loss since March, sending Asian spot LNG prices last week to thehighest level since 2022.
The re-escalation in the Middle East has further delayed any recovery of LNG flows out of the Strait of Hormuz.
and that is definitely impacting the demand insofar as India is concerned because there are a lot of sectors which are price sensitive,” Deepak Gupta, chairman of India’s top gas distributor, GAIL, said at the Gastech conference in Bangkok, as carried byReuters.
PetroChina, the biggest importer in the world’s top LNG-buying country, says the currentlower purchasesare a direct result of soaring prices.
“I think it is due to the temporary suppression of the demand faced by high price,” Luo Yizhou, CEO of PetroChina International (PCI), the trading arm of the Chinese state giant, said at the same conference.
“I don’t think it will kill the demand in China,” the executive added, noting that demand would rebound once prices return to a normal range of below $10 per million British thermal units (MMBtu).
Yaoyu Zhang, Assistant CEO & Global Head of LNG and New Energies at PCI, did caution that Chinese demand growth may not be quite as rapid as it was before Russia's invasion of Ukraine.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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