China’s Domestic Gas Boom and Pipeline Supply Cool LNG Imports in 2024, But Long-Term Demand Outlook Remains Strong

China, the world’s largest importer of liquefied natural gas (LNG), has notably dialed back its purchases in 2024, driven by rising domestic gas production, expanded pipeline deliveries, and softer weather conditions. According to customs data, China imported just 20 million metric tons of LNG in the first four months of the year, significantly down from nearly 29 million metric tons during the same period in 2023.

While this cooling trend has exerted downward pressure on regional spot LNG prices, industry executives emphasize that the long-term fundamentals remain intact. Both the industrial and power generation sectors are expected to drive future demand as China transitions to cleaner energy sources and scales back coal dependency.

Structural Forces Behind the Decline

A confluence of internal and external factors has reshaped China’s short-term LNG import patterns. The ongoing expansion of its pipeline infrastructure—coupled with robust growth in domestic natural gas extraction—has allowed China to reduce reliance on the more volatile and often more expensive seaborne LNG.

Key Drivers Reducing LNG Imports in 2024:

1. Surging Domestic Output: China’s national gas production rose steadily, reaching new record levels in Q1 2024, driven by upstream investments and shale gas development.

2. Pipeline Supply Boosts: Increased flows from Russia (via Power of Siberia) and Central Asia have supplemented demand at competitive rates.

3. Weather-Driven Demand Drop: A mild winter and cooler spring have curbed heating and power consumption.

4. Price Sensitivity Among Buyers: Chinese buyers have shown resistance to higher spot prices, preferring long-term or pipeline-linked contracts.

5. Inventory Build-Up: Robust imports in late 2023 created stockpiles that limited early 2024 purchasing activity.

Future Still Bright for LNG in China’s Energy Mix

Despite the recent slowdown, the longer-term outlook for LNG in China remains optimistic. Government policy continues to promote gas as a bridge fuel in the shift toward carbon neutrality by 2060. The industrial and power sectors, in particular, are expected to increasingly integrate LNG as part of the country’s effort to reduce air pollution and coal dependency.

• Industrial Growth: Sectors such as chemicals, ceramics, and metallurgy are scaling up gas usage for cleaner processing.

• Urbanization and City Gas Expansion: Rising gas demand from urban regions will necessitate diversified supply options.

• Energy Security Prioritization: LNG allows for flexible procurement amid geopolitical uncertainty.

• Infrastructure Expansion: New terminals and regasification plants under construction will facilitate increased future imports.

• Policy Support: National energy strategies continue to support diversified and low-carbon fuel sourcing, including LNG.

Shifting China’s LNG Narrative

This year’s subdued import figures should not be mistaken for a structural retreat from LNG. Instead, they highlight China’s growing leverage in balancing multiple supply streams, giving it greater control over pricing, procurement timing, and supplier diversification.

Emerging Trends to Watch:

• Increased reliance on long-term LNG contracts over spot cargoes.

• Greater integration between domestic, pipeline, and LNG supplies for energy security.

• Expansion of regasification capacity along China’s coastal provinces.

• Diversification of LNG suppliers beyond traditional partners.

• Use of LNG as a flexibility tool in managing seasonal and industrial demand shifts.

Evolving Gas Strategy in the World’s Largest LNG Market

• Strategic pivot toward pipeline gas and domestic output

• LNG remains central in energy diversification policies

• Spot price volatility prompts procurement recalibration

• Regulatory push for cleaner industrial fuel alternatives

• Infrastructure poised for future LNG import growth

China’s reduced LNG import volumes in early 2024 are reflective of a nuanced and evolving gas strategy rather than a reversal of demand. The country’s ability to blend domestic production, pipeline deliveries, and strategic LNG procurement gives it an increasingly influential role in global gas dynamics. While short-term fluctuations may continue, the structural drivers—industrial growth, urbanization, and decarbonization—point to a resilient and growing demand for LNG over the long term.