Market risks and challenges faced by LNG imports

Energy consulting company Wood Mackenzie predicts that my country's total liquefied natural gas (LNG) imports will reach 62.5 million tons in 2020, an increase of about 3% over 2019. In recent years, the contract model for imported LNG has evolved from "point-to-point" and long-term contracts to medium- and short-term contracts that do not restrict destinations. my country's LNG import market will continue to expand, exceeding 80 million tons, 100 million tons and 120 million tons in 2025, 2030 and 2035, respectively.

However, under the background of the impact of the epidemic, the continuous deepening of my country's natural gas market reform, and the increasingly complex international energy trading environment, the development of my country's LNG market still faces multiple risks. To this end, it is necessary to strengthen the dominant position of natural gas in primary energy, actively participate in international LNG trade, reduce the cost of LNG resources, actively participate in the upstream development of international natural gas resources, reduce the overall cost risk of the LNG industry chain, give full play to the role of the national pipeline network company, and improve Gas storage capacity, respond to changes in market supply and demand, and promote the development of the domestic natural gas market.

In December 2020, the Asian LNG spot price hit a new high, and the long-term agreement pricing model linked to international oil prices regained its advantages, which was once again favored by the market. In the case of higher spot market prices, more buyers began to choose long-term agreements again. Energy Aspects, an energy consulting firm, pointed out that with the resumption of production of projects under construction and the advent of new projects, it is expected that more LNG will enter the market in 2021, when Asian LNG prices may fall slightly.