China’s long-term LNG contracts surge, leaving it in a ‘delicate position’ with US and Russia
- China’s growing reliance on gas supplies from both the US and Russia could leave it at the mercy of geopolitical forces, a new report says
- China has signed a record number of long-term liquefied natural gas (LNG) contracts in the past two years, many with American firms
China has signed a record number of long-term liquefied natural gas (LNG) contracts over the past two years, leaving the country increasingly dependent on Russia and the United States amid rising geopolitical tensions, according to a new report.
Chinese energy firms signed 20 new LNG contracts last year, accounting for 40 per cent of all new contracts signed in 2021 in terms of volume, said the report by Anne-Sophie Corbeau and Sheng Yan from the Centre on Global Energy Policy of Columbia University.
“This strategy is in part driven by the record-high spot prices, which have pushed Chinese players to seek protection in long-term contracts,” the authors said.
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As half of these contracts last for at least two decades, with some starting in 2026 or later, it indicates that China anticipates a long-term need for LNG, according to the report.