China’s Trucked LNG Loses Edge to Pipeline Gas as Spot LNG Prices Climb

China’s domestic trucked LNG prices are expected to become less competitive than pipeline natural gas as Asian spot LNG prices rise in the run up to winter, putting pressure on LNG imports at a time when inventories are high and demand outlook is uncertain. This is likely to reverse a trend over the past few months when city gas distributors were favoring trucked LNG over pipeline gas, forcing LNG importers like national oil companies and private gas companies to procure more spot LNG, as JKM traded at record lows of $2-$2.5/MMBtu for most of the April-June period.

But spot LNG prices have been on the uptrend in recent weeks. JKM has more than doubled to over $4.50/MMBtu for October delivery, with projections for a winter peak of over $6/MMBtu. Only a handful of downstream city gas distributors have access to both trunk lines on China’s pipeline network and LNG trucked in from coastal terminals. But they have been enough to move the needle on China’s procurement due to flexible uncontracted volumes in addition to purchase contracts with NOCs like PetroChina, CNOOC and Sinopec, and non-NOC importers like ENN and Guanghui Energy…

View entirety: S&P Global Platts