China's largest buyer of LNG, China National Offshore Oil Corp., is unlikely to seek additional spot cargoes before August as it has sufficient inventory from its term contracts, said industry sources Friday.
A source close to the 2.8 million mt/year Fujian LNG import terminal in southern China, where most of the state-run company's LNG cargoes arrive, said that current hydropower generation and term deliveries into the terminal were adequate to cover domestic power demand for now.
"Three out of four tanks are full and hydropower generation is quite average for the time of year -- although it [hydropower generation] is lower compared with what we saw last year," the source noted, without providing specific details.
Seven out of a possible 10 gas-fired power units around the terminal are currently running, said the source, adding that this was sufficient to cover the relatively steady power demand within the Fujian province.
"The demand for energy is pretty steady. It is only slightly [higher] than last year," the source said.
While there had been a slight increase in gas demand from the previous year, the source said that this could still be covered by the term deliveries. The higher gas requirement from the power plants was largely due to switching to gas from coal, and not any fundamental uptick in electricity demand.
"Some of the cities are increasing their demand for gas because the government is changing fuel source from coal to gas as part of a plan to reduce air pollution," he said.
As a seasonal LNG buyer, CNOOC typically enters the Asian LNG spot market at the start of the summer season, seeking additional cargoes for its four import terminals located around the southern coast of the country as electricity demand in southern China rises with increased air conditioning use.
