AsianFin -- China has held the crown as the world’s top importer of liquefied natural gas (LNG) for two straight years, while the U.S. claimed the mantle of the largest exporter in 2023—a dynamic that marked a new phase in the global LNG market.
But what appeared to be a stable energy order is now facing mounting uncertainty as tariffs, geopolitical tensions, and softening demand in China threaten to reshape the trade.
While China and the U.S. are still the twin anchors of global LNG flows, their dominance is being tested by a confluence of forces.
The Russia-Ukraine conflict, Middle East flashpoints, and a looming tariff battle have all placed LNG—long viewed as the most promising fossil fuel—squarely in the middle of global strategic recalibrations. The Biden administration’s previous restraint on LNG facility approvals has been reversed under Trump’s return to power, and with “reciprocal tariffs” set to kick in this August, the U.S. is once again wielding energy as a geopolitical lever.
On the import side, China’s LNG appetite—once roaring—has slowed dramatically. Imports in the first five months of 2024 fell 23% by volume and 26% by value compared with a year earlier, despite an 8% annual increase in 2023. Soft winter demand, high inventories, and escalating tariffs contributed to the pullback.
Beijing halted U.S. LNG purchases entirely from March after slapping a 15% retaliatory tariff, a sharp contrast with the 1.35 million tons it had imported during the same period in 2023.
Even as China remained the world’s top LNG buyer, its import mix shifted. Qatar overtook Australia as China’s biggest LNG supplier in early 2024, while Russia climbed to third, surpassing Malaysia. Of China’s top five sources, only Qatar saw positive year-on-year growth.
The U.S., now shut out of the Chinese market, has redirected cargoes to Europe, where nearly 60% of LNG imports in the first five months of 2024 originated from American exporters. The EU, spurred by its 2022 energy crisis, continues its push to eliminate Russian supplies entirely, with a new legislative proposal calling for a total phaseout of Russian LNG contracts by end-2027.
Yet not all disruptions materialized. Following a brief scare in June when Iran threatened to block the Strait of Hormuz—a key conduit for Qatari LNG—the crisis was defused through U.S.-brokered talks. The narrow waterway handles about 20% of global LNG volumes.
As geopolitical tensions rise, LNG is increasingly becoming a tool in trade negotiations.
Vietnam has agreed to promote over $90 billion in U.S. imports—$6 billion of which is earmarked for LNG—as part of a broader deal to ease its trade imbalance with Washington. Japan, South Korea, and the EU have all faced U.S. pressure to expand LNG purchases or co-invest in infrastructure.
At home, Trump’s administration has fast-tracked approvals for new LNG export terminals in a bid to boost long-term capacity. The U.S. Department of Energy projects North America will supply about 30% of global LNG in the coming years.
Despite volatility, industry leaders remain optimistic about LNG’s future.
PetroChina’s natural gas sales rose 5.2% in 2023, delivering over 54 billion yuan ($7.4 billion) in profit and helping offset weak oil revenues. The company controls over 60% of China’s LNG market.
In the U.S., leading exporters Cheniere Energy and Venture Global saw shares rebound after an April slump triggered by tariff fears. Global majors like ExxonMobil, Chevron, BP, and Shell are also deepening LNG bets.
Shell’s annual LNG Outlook and BloombergNEF both forecast more than 50% growth in global LNG demand by 2040, with China expected to be the largest contributor. Deloitte sees China’s 2033 LNG consumption rising 55% over 2023 levels; KPMG believes demand could even double by 2030.
Still, oversupply looms. Goldman Sachs projects global LNG prices will decline through the decade, with European prices potentially halving within three years.
That’s a double-edged sword for exporters—while price softness may curb inflation and benefit consumers, it also threatens margins for producers ramping up capacity.
For more in-depth coverage of energy markets, trade dynamics, and global economic shifts, visit Barron’s China.
