According to the U.S. Energy Information Administration (EIA) website article published on May 25, 2023:
China’s natural gas consumption and LNG imports declined in 2022
In 2022, annual natural gas consumption in China declined by 1% (0.4 billion cubic feet per day) compared with the previous year, according to data from S&P Global Commodity Insights—the first decline in annual consumption since 1990, according to our International Energy Statistics. The decline in natural gas consumption resulted from slower economic growth, mainly from China’s zero-COVID policies, which led to widespread lockdowns, as well as government policies that re-prioritized supply security (including growth in coal production) over emissions targets.
China’s natural gas consumption more than tripled between 2010 and 2022, from 10.4 Bcf/d to 35.1 Bcf/d. The industrial sector led China’s natural gas consumption growth over this period, increasing by 10.3 Bcf/d, followed by the residential and commercial sector at 6.5 Bcf/d and the electric power sector at 3.4 Bcf/d. Rapid growth in China’s natural gas consumption over the last decade resulted from strong economic growth, urbanization, and environmental policies that supported coal-to-natural gas switching in an effort to reduce air pollution and meet emissions targets.
Rapid growth in domestic natural gas production, which more than doubled from 8.9 Bcf/d to 20.5 Bcf/d between 2010 and 2022, met about half of the increase in demand. Domestic production expanded by more than 1.0 Bcf/d every year since 2017, mainly because of growth in production from discrete gas reservoirs and associated natural gas from oil production. Production has also increased from low-permeability formations including tight gas, shale gas, and coalbed methane. In 2019, the Chinese government introduced a subsidy program that established new incentives for production of natural gas from tight gas formations and extended existing subsidies for production from shale and coalbed methane resources. Between 2019 and 2022, tight gas production increased by 0.6 Bcf/d and shale gas production increased by 0.8 Bcf/d.
Despite significant growth in domestic natural gas production, China has become increasingly dependent on natural gas imports to meet growing natural gas demand. Natural gas imports [combined pipeline and liquefied natural gas (LNG)] accounted for 46% of China's total natural gas supply in 2021 and 42% in 2022, an increase from 15% in 2010.
After becoming the world’s largest LNG importer in 2021, China’s LNG imports fell by 20% (2.0 Bcf/d) in 2022, mainly because of lower demand and high LNG spot prices. China’s LNG imports averaged 8.3 Bcf/d in 2022—the lowest level since 2019, according to data from China’s General Administration of Customs. Prior to 2022, China’s LNG imports declined only once—in 2015—by a much smaller volume. Imports by pipeline offset some of the declines in LNG imports, increasing by 8% (0.4 Bcf/d) in 2022 compared with 2021, mainly because of increased flows from Russia via the Power of Siberia pipeline.
Market Highlights:
(For the week ending Wednesday, May 24, 2023)
Prices
- Henry Hub spot price: The Henry Hub spot price fell 1 cent from $2.25 per million British thermal units (MMBtu) last Wednesday to $2.24/MMBtu yesterday.
- Henry Hub futures prices: The price of the June 2023 NYMEX contract increased 3.3 cents, from $2.365/MMBtu last Wednesday to $2.398/MMBtu yesterday. The price of the 12-month strip averaging June 2023 through May 2024 futures contracts rose 3.9 cents to $3.099/MMBtu.
- Select regional spot prices: Natural gas spot prices fell at most locations this report week (Wednesday, May 17, to Wednesday, May 24). Price changes at major pricing hubs this report week ranged from a decrease of 95 cents/MMBtu at PG&E Citygate to an increase of 42 cents/MMBtu at the Waha Hub.
- Price changes were relatively small in most trading markets this report week. In the Northeast, the largest price change was a decline at the Algonquin Citygate, which serves Boston-area consumers, where the price decreased 7 cents from $1.67/MMBtu last Wednesday to $1.60/MMBtu yesterday. According to data from S&P Global Commodity Insights, natural gas consumption in the Northeast decreased 1%, or 0.2 billion cubic feet per day (Bcf/d), as a 14% increase (0.5 Bcf/d) in residential and commercial sector consumption partially offset a 10% decrease (0.8 Bcf/d) in electric power sector consumption. In the Boston-Area, temperatures averaged 59°F this week, resulting in 27 more heating degree days and 19 fewer cooling degree days than last week.
- Prices in all West Coast markets declined yesterday from last Wednesday. The price at PG&E Citygate in Northern California fell 95 cents, down from $4.13/MMBtu last Wednesday to $3.18/MMBtu yesterday. The price at SoCal Citygate in Southern California decreased 33 cents from $2.58/MMBtu last Wednesday to $2.25/MMBtu yesterday. The price at Sumas on the Canada-Washington border fell 21 cents from $1.83/MMBtu last Wednesday to $1.62/MMBtu yesterday. Natural gas consumption in the Western region decreased by 1% (0.1 Bcf/d), which was led by a 4% (0.1 Bcf/d) decrease in consumption in the electric power sector. In Northern California, PG&E’s total gas in storage was 12.6 billion cubic feet (Bcf) as of May 23, up from 5.8 Bcf on May 1.
- In West Texas, the price at the Waha Hub, which is located near Permian Basin production activities, rose 42 cents this report week, from $1.47/MMBtu last Wednesday to $1.89/MMBtu yesterday. The Waha Hub traded 35 cents below the Henry Hub price yesterday, compared with last Wednesday when it traded 78 cents below the Henry Hub price. Maintenance in West Texas earlier this month on the Permian Highway Pipeline (PHP), which delivers gas to Southeast Texas, has been completed, and available capacity on the PHP returned to 2.1 Bcf/d on May 13.
- Daily spot prices by region are available on the EIA website. International futures prices: International natural gas futures prices decreased this report week. According to Bloomberg Finance, L.P., weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell 90 cents to a weekly average of $9.73/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands fell $1.18 to a weekly average of $9.27/MMBtu. In the same week last year (week ending May 25, 2022), the prices were $22.10/MMBtu in East Asia and $27.16/MMBtu at TTF.
- Natural gas plant liquids (NGPL) prices: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 13 cents/MMBtu, averaging $6.16/MMBtu for the week ending May 24. Weekly average ethane prices rose 5%, while natural gas prices at the Houston Ship Channel rose 11%, narrowing the ethane premium to natural gas by 7% week over week. Ethylene spot prices rose by 1%, decreasing the ethylene to ethane premium by 1%. Propane prices fell 1%, and the Brent crude oil price rose 2%, resulting in a 5% increase in the propane discount relative to crude oil. The normal butane price rose 1%, the isobutane price rose 4%, and the natural gasoline price rose 5%.
Supply and Demand
- Supply: According to data from S&P Global Commodity Insights, the average total supply of natural gas rose by 0.2% (0.2 Bcf/d) compared with the previous report week. Dry natural gas production grew by 0.4% (0.4 Bcf/d), and average net imports from Canada decreased by 4.0% (0.2 Bcf/d) from last week.
- Demand: Total U.S. consumption of natural gas fell by 1.8% (1.2 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. Natural gas consumed for power generation declined by 5.8% (1.9 Bcf/d) week over week. Residential and commercial sector consumption increased by 5.0% (0.5 Bcf/d), and industrial sector consumption increased by 1.0% (0.2 Bcf/d). Natural gas exports to Mexico increased 1.5% (0.1 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.7 Bcf/d, or 0.1 Bcf/d lower than last week.
Liquefied Natural Gas (LNG)
- Pipeline receipts: Overall weekly average natural gas deliveries to U.S. LNG export terminals decreased by 0.5% (0.1 Bcf/d) week over week to average 12.7 Bcf/d this report week, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Texas decreased by 9.0% (0.4 Bcf/d) to 3.8 Bcf/d, while deliveries to terminals in South Louisiana increased by 4.3% (0.3 Bcf/d) to 7.7 Bcf/d. Natural gas deliveries to terminals outside the Gulf Coast were essentially unchanged at 1.2 Bcf/d.
- Vessels departing U.S. ports: Twenty-five LNG vessels (eight from Sabine Pass; five from Freeport; four from Corpus Christi; three from Calcasieu Pass; two each from Cameron and Cove Point; and one from Elba Island) with a combined LNG-carrying capacity of 93 Bcf departed the United States between May 18 and May 24, according to shipping data provided by Bloomberg Finance, L.P.
Rig Count
- According to Baker Hughes, for the week ending Tuesday, May 16, the natural gas rig count was unchanged from a week ago at 141 rigs. The number of oil-directed rigs decreased by 11 rigs from a week ago to 575 rigs. The Permian dropped four rigs, the Eagle Ford dropped three rigs, the Ardmore Woodford and DJ-Niobrara each dropped one rig, and two rigs were dropped in unidentified producing basins. The total rig count, which includes 4 miscellaneous rigs, stands at 720, 8 fewer rigs than last year at this time.
Storage
- The net injections into storage totaled 96 Bcf for the week ending May 19, compared with the five-year (2018–2022) average net injections of 96 Bcf and last year's net injections of 88 Bcf during the same week. Working natural gas stocks totaled 2,336 Bcf, which is 340 Bcf (17%) more than the five-year average and 529 Bcf (29%) more than last year at this time.
- According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 88 Bcf to 106 Bcf, with a median estimate of 98 Bcf.
More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.
