China’s Gas Growth Casts a Shadow over LNG Demand

Core Insights - China is rapidly increasing its domestic natural gas production, necessitating revisions to LNG demand forecasts [1] Group 1: Domestic Production Growth - Less than a decade ago, China faced challenges in boosting domestic gas production, particularly in shale formations, but state oil and gas companies are now achieving record production levels and making new discoveries [2] - In November of the previous year, China produced 22.1 billion cubic meters of natural gas, marking a 7.1% year-on-year increase, primarily driven by accelerated shale gas production in the Sichuan Basin [3] Group 2: Impact on LNG Imports - Rising domestic production is expected to reduce LNG imports, with last year's domestic gas production leading to a significant decline in LNG imports, which fell to the lowest level in six years after 12 consecutive monthly declines [4] - Kpler forecasts a further decline in Chinese demand for LNG this year, estimating a reduction of 600,000 tons due to increased shale gas production, bringing total demand down to 73.9 million tons [4] Group 3: Market Implications - The anticipated decline in China's gas demand may disrupt new LNG capacity addition plans and impact prices, potentially shrinking producers' profits [6] - Analysts predict that the wave of new LNG supply expected to come online by the end of the decade, primarily from the U.S. and Qatar, could lead to an oversupplied LNG market by 2030, exerting downward pressure on prices [6]