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Chinese LNG demand to squeeze global supply – TotalEnergies

(Montel) The global LNG market will likely remain tight this year despite stable supply amid higher demand from China, TotalEnergies CEO Patrick Pouyanne said on Wednesday.

He said he “would not be surprised” if Chinese LNG imports returned this year to the 2021 record high of 81m tonnes (110.5bcm), after demand slumped over the past two years as the country was still in post-Covid recovery.

He noted that with the Asian LNG benchmark JKM at around USD 10/MMbtu – near eight-month lows – this was a “good driver” as he presented the company’s full-year results.

China imported about 71m tonnes (97bcm) of the liquid fuel last year, 11% higher than 2022, and there was “still room for growth [with] Chinese buyers being quite aggressive and signing a number of long-term contracts”, Pouyanne said.

As a supplier, TotalEnergies was in talks with some Chinese players who were “willing to diversify their sources of LNG,” he added, without giving further details.

Meanwhile, Europe’s LNG demand is also expected to grow this year, after nearly doubling since 2021 to 114m tonnes (155.5bcm) in 2023 as it replaced Russian piped gas amid the Ukraine war, he said.

Russian supply
LNG markets should remain “in tension” this year due to “very limited LNG capacity additions until mid-2026/2027”, Pouyanne said, adding that any unplanned outages would add to the tightness.

His company has identified a potential increase of around 8m tonnes (11bcm) of additional supply, or about 2%, some of which will come from Russia's Arctic LNG 2 project, “which will have limited market” due to Western sanctions, he said.

Last month, TotalEnergies declared force majeure regarding the 19.8m tonnes/year (27bcm/year) project, in which it had a 10% direct stake.

The firm is targetting “more than 40m tonnes” (54.6bcm) of LNG sales this year, compared with 44.3m tonnes (60.4bcm) last year, which was an 8% drop from 2022.

For 2023, the company posted a 44% year-on-year drop to USD 11.17bn in adjusted net operating income as the average price of the chilled fuel slid 32% to USD 10.76/MMbtu.