PipeChina's spare LNG terminal capacity totals 13 mil mt for Feb-Dec 2022

The spare LNG receiving capacity at seven LNG terminals affiliated with China Oil & Gas Piping Network Corp., also known as PipeChina, is around 13 million mt for the February-December 2022 period, according to data released by the state-owned oil and gas infrastructure company late Jan. 10.

The volume accounts for 47.6% of the seven LNG terminals' total designed LNG receiving capacity of 27.6 million mt/year. The available capacity at PipeChina's six LNG receiving terminals was at 6.42 million mt in 2021.

Market participants said there has been a drop in interest from China's second and third tier gas companies for LNG terminal slots, due to high global gas prices and lower downstream demand. A lot of buyers expect LNG spot prices to remain above $20/MMBtu in 2022, with negative margins through most of the year, traders said.

The 6 million mt/year Tianjin LNG terminal in northern China and 2 million mt/year Yuedong LNG terminal in southern Guangdong province have just 13%-14% spare capacity left over the February-December 2022 period, the data showed.

Spare capacity at the 6 million mt/year Dalian terminal in northwestern Liaoning province is relatively high at 68% for the next 11 months, while the 3 million mt/year Hainan terminal in South China's Hainan island and the 600,000 mt/year Fangchenggang terminal in southwestern Guangxi province have more spare capacity than their total nameplate capacity over the period, the data showed.

It's common for LNG terminals to have a little more actual receiving capacity than their designed capacity due to debottlenecking.

PipeChina, prior to this, had awarded medium to long-term LNG receiving terminal slots for a period of five to 20 years to 14 applicants, with contracts effective April 1, 2022.

Privately-owned Guangdong Jovo Energy Group signed a medium to long-term LNG terminal user agreement with PipeChina Oct. 26, without disclosing further details.

PipeChina currently operates seven LNG receiving terminals -- Liaoning Dalian, Tianjin Nanjiang, Jieyang Yuedong, Shenzhen Diefu, Guangxi Beihai, Hainan Yangpu and Guangxi Fangchenggang.

The LNG terminals are located along China's coastal cities from the northeast to the south, with a combined capacity that accounted for a quarter of China's total LNG receiving capacity of around 105.8 million/year at the end of 2021.

"China's LNG imports, especially spot LNG imports are expected to reduce obviously in 2022, as importers would try to avoid big losses caused by import costs higher than domestic sales prices," according to a Beijing-based market participant.

The source said many smaller LNG companies were not expected to request a large number of PipeChina's terminal slots, when prices are likely to be elevated in 2022.

A second source said that a lot of slots will remain with PipeChina's Tianjin in 2022, with most Chinese firms looking to minimize spot procurement activity while maximizing long-term volumes with suppliers.

PipeChina LNG terminal spare receiving capacity over February-December 2022 (Unit: '000 mt)

Source: PipeChina website