China’s LNG trucking capacity to double in the medium term

Market analyst Wood Mackenzie forecasts LNG trucking capacity in China will double to 38mn tonnes by 2025.

China is the world’s largest LNG trucking market. In 2017, 19mn tonnes of LNG was transported via tanker truck from domestic liquefaction plants and LNG import terminals to downstream markets, according to the analyst. This volume accounts for 12% of total gas consumption.

The sector has played a key role in supporting gas demand in China, especially in the last winter season when the nation faced severe gas shortage issues as it moves to comply with clean air or coal-to-gas switching mandates.

According to Wood Mackenzie, new residential, commercial and industrial gas users outside the pipeline coverage resorted to trucked LNG as the only way to fulfil switching targets as there was not enough time nor was it economical to build or expand pipelines. Furthermore, domestic liquefaction plants were unable to cope with the surge in winter demand as their feedgas was rationed. Trucking enabled terminals to import more LNG than regas capacity, while excess LNG was transported off to demand areas across the country. In some cases, LNG was trucked more than 2,000 km from southern terminals to northern China.

The flexibility of LNG trucking alleviates China’s lack of pipeline coverage, storage and regas capacity. It also adds liquidity to China's gas market and facilitates price discovery.

‘While we witnessed logistics companies rush to buy more LNG trucks over last winter, equally important is the number of truck-loading positions and operational efficiency at LNG terminals. These factors determine the amount of LNG that can be transported out to demand centres,’ commented Miaoru Huang, Senior Manager, Wood Mackenzie. ‘The good news is truck-loading positions can be added relatively quickly, and currently, there are about 20.2mn t/y of truck-loading capacity across the country’s LNG receiving terminals. We expect China’s gas demand to reach 264bn cm this year. Similar to 2017, 12% of demand will be supported by LNG trucking.’

‘LNG trucking has increased gas-on-gas competition. It has helped create a spot market for gas. Until China’s gas market evolves to one with a price discovery function, trucked LNG will continue to be welcomed by market participants looking for liquidity and flexibility,’ concluded Huang.