China’s LNG imports decreasing: what is ahead for the remainder of 2022?

China’s gas demand has been under pressure since Q4 2021 due to the economic slowdown, higher import prices, coal-friendly policy and a warmer past winter. More recently, new factors, namely the Covid outbreaks and widespread lockdowns, have dealt a major blow to energy demand, including natural gas. LNG imports have been hit the hardest, dropping by 18% year-on-year so far. The downward pressure is expected to continue for the remainder of 2022. We now expect 2022 LNG imports to decrease by an unprecedented extent to 70 Mt. While coal’s key role in energy security won’t change in the near future, provincial energy policies signify gas and LNG demand growth potential. Some provinces are still targeting a higher gas share in the energy mix over 2021-2025. Not all of those targets can be reached in the face of headwinds and high gas prices, but they reveal China’s gas demand potential that could materialise with affordable gas price levels and supply chain support.