Key facts
- China's major LNG importers are seeking long-term supply deals with exporters not dependent on the Strait of Hormuz.
- The move is driven by a desire to reduce exposure to potential disruptions in the Persian Gulf.
- LNG imports from Qatar to China have significantly dropped in the second quarter of 2024.
- Canada is being considered as a potential alternative LNG supplier.
- China aims to avoid over-reliance on U.S. LNG exports due to trade policy uncertainties.
China, the world's largest buyer of liquefied natural gas (LNG), is actively seeking long-term supply agreements with exporters that do not rely on the Strait of Hormuz. This strategic move aims to mitigate risks associated with potential disruptions in the Persian Gulf, a critical shipping route. Sources familiar with the matter indicated that major Chinese state-controlled LNG importers, including PetroChina and Sinopec, are in discussions for contracts potentially starting before 2030 and lasting at least ten years.
Last year, Qatar was China's top LNG customer, supplying approximately 30% of its total LNG imports. However, recent escalations in the Middle East conflict and associated damage to Qatari facilities have led to a significant drop in these imports. Data shows that China imported only about 100,000 tons of LNG from Qatar in the second quarter of this year, a stark contrast to the 4.7 million tons imported during the same period in 2023.
While China does not intend to cancel existing contracts with Qatar, Beijing is exploring alternative sourcing options. Canada has emerged as a potential supplier, as it seeks to expand its energy exports to Asia and diversify away from its heavy reliance on the U.S. market. However, China also faces a dilemma regarding U.S. LNG exports, preferring to avoid dependence due to ongoing trade and tariff policy uncertainties under President Donald Trump.