Summary of J.P. Morgan's China Natural Gas 2035 Outlook Industry Overview - The report focuses on China's natural gas market, particularly the liquefied natural gas (LNG) sector and its evolving dynamics through 2035 [1][2][7]. Key Projections and Changes - **LNG Demand Forecast**: Initially projected to reach 140 Bcm in 2030, the forecast has been revised to a peak of 120 Bcm in 2032, followed by a decline to 105 Bcm by 2035 [2][7][54]. - **Domestic Production Growth**: Domestic gas production is expected to grow at a compound annual growth rate (CAGR) of 10%, reaching 375 Bcm by 2035, maintaining a production-to-consumption ratio of around 60% [12][18]. - **Pipeline Imports**: Russian pipeline flows to China are anticipated to increase steadily, reaching 106 Bcm by 2035, significantly impacting China's LNG import profile [2][39][44]. Demand Drivers - **Industrial and Chemical Sectors**: Industrial natural gas demand is projected to grow at a CAGR of 3.8% from 2024 to 2030, driven by lower natural gas prices and increased usage per unit of industrial output [20][25]. - **Power Generation**: Gas-for-power demand is expected to face pressure from the expansion of renewables, with a projected CAGR of 3.7% from 2024 to 2030 [26][33]. Strategic Developments - **Power of Siberia 2**: This new pipeline is expected to come online in 2031, ramping up to full capacity by 2035, which will deepen China's reliance on Russian gas supplies [38][41]. - **Regasification Capacity**: China is expanding its regasification capacity, which is projected to peak in 2032, providing flexibility to increase imports from alternative sources [50][57]. Policy and Infrastructure Support - **Government Support**: The Chinese government continues to extend subsidies for unconventional gas production, which is crucial for maintaining domestic production growth [19][12]. - **Storage Capacity Expansion**: The government aims to boost national gas storage capacity to 55-60 Bcm by 2025, with further expansions expected under the 15th Five-Year Plan [59][61]. Market Dynamics - **Transition to Trader**: China is evolving from a pure LNG importer to a strategic trader, leveraging its extensive regasification infrastructure and diverse LNG contract portfolio [54][58]. - **Cost Considerations**: Russian pipeline gas is expected to remain the lowest-cost imported option, influencing China's import strategy [47][48]. Conclusion - The outlook for China's natural gas market through 2035 indicates a significant shift in supply dynamics, driven by increased domestic production, strategic partnerships with Russia, and a growing emphasis on renewables. The evolving landscape presents both opportunities and challenges for investors and stakeholders in the energy sector [7][54][58].