In October, Chinese LNG imports increased marginally y/y by 0.02 Mt (1.8%) to 1.38 Mt, following y/y declines over August and September. Total pipeline gas imports also increased by another 0.18 Mt (8.8%) y/y to 2 Mt. As a result, total gas imports for China were at 3.38 Mt in October, which is higher y/y by 0.19 Mt (5.9%). Chinese domestic gas production, meanwhile, grew y/y by another 1.1 bcm (12%) to 10.31 bcm. Over the first ten months of the year, domestic production has grown by 8.6% y/y (8.32 bcm).
The big story on the supply side was the sharp decline in pipeline imports from Turkmenistan, which fell by nearly 0.34 Mt (-21%) y/y in October to 1.29 Mt. Meanwhile, pipeline imports from Myanmar increased sharply to 0.44 Mt, a record high, having averaged 0.12 Mt/m, over the last six months. The increase in Myanmar imports points to some rising demand for gas in the south of the country, although it does not fully explain all of the increase.
In terms of LNG imports, China received its first cargo (0.07 Mt) from Papua New Guinea (PNG) in October. Yemen, Qatar and Equatorial Guinea saw y/y increases in LNG exports to China, while Malaysia, Indonesia and Australia experienced y/y reductions.
The increase in gas imports came alongside an increase in total power generation. Power generation was up y/y by 14.1 TWh (3.3%) in October, although thermal generation fell by 19.1 TWh (-5.4%) y/y over the same period. The decline in thermal generation compensated for strong increases in hydro and nuclear generation, up y/y by 27.3 TWh (39%) and 1.5 TWh (15%) respectively. Output from all other power sources increased by another 4.4 TWh (40%) y/y. Over the first nine months of the year, China added 58 GW of generating plants, with 28 GW of that thermal, adding to the 36.5 GW of thermal added in 2013. Of the non-thermal plants, 17 GW is hydro and 13 GW is either nuclear or renewables.
In November, Sinopec's new 3 Mtpa Shandong LNG terminal received its first LNG cargo. The cargo was sourced from Trinidad as a floating storage play on the hope of higher winter spot prices. The ship was anchored in Brazil for half a month before it started heading to Asia. The Shandong terminal will receive volumes under a long term LNG supply contract with the PNG LNG project. We expect it will be most actively used in the winter.