Central Asia gas to China: LNG's less-seasonal competitor Report

Insight 05 July 2017

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Report summary

Central Asian gas has been piped to China since 2009 and volumes continue to grow (around 33 bcm in 2016). It will remain a core part of China's gas mix, averaging 17% of supply in 2017-22. However, these flows face sustained pressure from intense gas-on-gas competition. Piped supply struggles to be cost-competitive across China's regions – whether in the west or east. Central Asian gas loses out to cheaper domestic production in central China and to flexible LNG in coastal regions. The giant gas fields of Turkmenistan and Uzbekistan may seem remote, but they are an important building block of global gas dynamics. The competitiveness of Central Asian gas influences China's call on spot LNG and the seasonal availability of excess LNG supply in other markets. In the medium term, marginal LNG may find a home in China that less-competitive piped imports are unable to fill.

Introduction
Tough competition across China's regional markets
- The challenge from cheap domestic gas begins in northwest China
- High tariffs and lack of seasonality undermine competitiveness further east
Upstream capacity in place for higher exports
Central Asia gas to China: low for longer?
Central Asia outlook helps shape global gas and LNG trade
Central Asia-China gas: current status and what to watch