ASIA-PACIFIC should keep an eye on natural gas imports by China and India, whose ongoing pipeline projects will heavily affect regional gas pricing, said panellists at Commodity Trading Week Apac 2025 on Wednesday (Feb 19).
This is especially so for Japan, South Korea and Australia as they are heavily dependent on liquified natural gas (LNG) imports for their energy needs.
The two giant energy consumers, China and India, are securing pipeline gas to fulfil their domestic needs amid geopolitical threats. The long-term pipeline deals will allow them to lock in large volumes of gas at potentially lower prices, reducing their reliance on LNG.
By end-2024, China has completed a pipeline project to transport gas from Russia. Its full annual capacity of 38 billion cubic metres is equivalent to about 9 per cent of China’s consumption in 2024.
The Indian government announced in January plans to expand its natural gas pipeline network. It also recently signed a memorandum of understanding to increase the supply of oil and gas from Azerbaijan.
Nonetheless, how China and India source their natural gas, whether through pipelines or LNG, will have ripple effects on the market dynamics in Apac, and eventually other energy sources’ prices.
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Achal Sondhi, chief investment officer at Aquila Clean Energy Apac, noted in a panel that if both countries do achieve the gas pipeline imports the way they want to, it will affect the dynamics of LNG markets, and eventually Apac’s LNG pricing.
“(The energy pricing) will change because gas is on the margin, and then that would drag how the rest of the power markets fluctuate,” said Sondhi.
Natural gas is often the marginal fuel, whose prices tend to set the overall price level for energy.
Energy trader MET Asia Energy’s chief financial officer Max Mo noted that despite China being a net gas importer for a long time, the import volumes have decreased significantly.
“That’s because they are slowly being self-reliant on a lot more of the domestic supply and production,” said Mo.
In 2024, China’s LNG imports reached around 77 million tonnes, close to the record high of 79 million tonnes in 2021 right before the Covid lockdowns.
This was despite import growth being slowed by a soft demand recovery and significant inventory build-up, Rystad Energy highlighted in a note on Monday.
The team from the energy research company expects an industrial demand recovery in China this year off the back of government stimulus, which should spark competition from Asian buyers and support gas prices.
However, trade tensions still loom at the background, capping China’s demand recovery and energy price upsides.
“The success of domestic economic stimulus measures could be offset by a potential trade war with the new Trump administration in the US,” said the team, highlighting that China’s manufacturing activity was hit noticeably in 2019 with the onset of the first trade war.
A trade war potentially escalated by China’s retaliation will put natural gas and LNG markets on a “wild ride”, said Rystad Energy’s vice-president Emily McClain in the note.
“Based on past trends, we expect China to scale back US LNG imports, which may not cause immediate price shocks but could shift long-term trade flows in favour of suppliers like Australia and Qatar,” added McClain.
