Chinese gas output growth accelerates, imports strong

China's domestic gas production growth accelerated in September, which, coupled with stronger gas imports, resulted in the country's apparent demand rising compared with a year earlier.

Domestic gas output rose to 14.6bn m³ last month from 13.5bn m³ in September 2019, data from China's national statistics bureau show. This equates to year-on-year growth of 8pc, up from 2.9pc in August and 2.5pc in July. Output in January-June grew by 10.9pc from a year earlier, while full-year 2019 production growth was 9.3pc.

Aggregate receipts of LNG and pipeline gas rose to 8.66mn t in September, up by 8.7pc from 8.22mn t a year earlier, preliminary customs data show. This left China's apparent gas demand — domestic production plus net imports — around 6.8pc higher on the year, largely in line with previous months.

China's apparent gas demand growth slowed to 6.5pc in the first eight months of this year compared with 11.8pc over the same period in 2019, as the Covid-19 pandemic weighed on economic activity.

LNG import growth has outpaced overall apparent gas demand growth so far this year, rising by 10.3pc in the first eight months of this year compared with a year earlier.

China's domestic gas output growth had been expected to slow in the second half of this year, possibly supporting rising demand for imports. But production growth holding in line with September could limit the scope for additional LNG imports, leaving them at 17.5mn t in the fourth quarter, or around 2.8pc higher than a year earlier, assuming apparent gas demand growth holds in line with recent months.

A La Nina weather event in the Pacific Ocean resulting in below-average temperatures in northeast Asia could boost China's heating demand. But the limited rise in regasification capacity this year could limit China's ability to import larger volumes of LNG this winter and cap imports at 19.4mn t in the fourth quarter.

By Livia Gallarati

Chinese domestic gas production