I see many items of comment about why we should do more when China is a big problem?
I answer these posts with China’s Twin Gorges Dam which has put hundreds of coal-burning plants into shutdown. Also, I point out they have the best electrical distribution system in the world enabling the whole country to take advantage of Twin Gorges generation. Canada contributed greatly in the building of the Twin Gorges.
Here is an important article from a North American oil magazine.
Last winter, China gobbled up spot cargoes to meet soaring natural gas demand in freezing temperatures, upending the liquefied natural gas (LNG) market, which was thought to be on the verge of oversupply just a year ago.
The Chinese coal-to-gas switch policy for millions of households backfired with severe gas shortages last winter, lifting domestic Chinese LNG prices to more than US$20/mmBtu and driving Asian spot LNG prices up.
This winter, China’s authorities are determined to avoid another natural gas supply crunch. And they are handling supplies much better than past winter—domestic natural gas production is rising, state energy giants are boosting gas pipeline infrastructure and connectivity, and the coal-to-gas switch is more measured and moderate, taking into account expectations of demand.
Chinese natural gas imports are soaring, but procurement for this winter’s demand started early to avoid a last-minute rush and a repeat of the 2017-2018 winter. China’s natural gas storage tanks are close to full. The element of surprise that pushed LNG prices soaring last winter has been eliminated.
This year, weather is also in favor of Chinese authorities. Milder weather a month into the heating season and forecasts for a milder-than-usual winter have led to expectations that China won’t see another supply crunch between December and February.
As a result, spot LNG prices in Asia fell last week to their lowest level in six months, with spot prices for January delivery down US$1 in one week to US$8.80/mmBtu—the lowest price since May this year and down from last year for the first time in 2018. That’s because demand is softer, storage is nearly full, and buyers from China to South Korea to Japan had moved in as early as in September and October to procure LNG cargoes to avoid last year’s rush and surging market prices. A drop in spot LNG prices in Asia is not typical for the winter season in the northern hemisphere. Related: Citi: Oil Prices Are Going Nowhere Next Year
Prices and natural gas demand soared last winter as China was scrambling to procure supplies in a colder-than-usual season. The authorities had to backtrack on the coal ban in some areas to ease the crunch.
This year, milder weather has surely helped, but China started to carefully plan supply, as soon as last winter’s season ended. Posted by John Clark at 2:17 pm