Russian gas to China: 2019 start threatens China’s LNG import growth
Gazprom and CNPC announced they would start gas supplies via the yet-to-be-built Power of Siberia pipeline on 20 December 2019. This is early in the previously agreed 2019-2021 start-up window. The gas supply deal is significant in balancing China’s long-term gas supply and demand. However, Russian gas exports will face challenges from cheap China domestic supplies in the near term. Given competition from domestic gas, we think initial volumes could be small, accommodating seasonal demand swings in China’s northern markets. Potential for piped gas supply could discourage China's requirement for LNG. The earlier start-up and ramp-up of Russian gas exports could partially cause China’s LNG demand growth to slow after 2020.