This is a best prospect industry sector for this country. Includes a market overview and trade data.
Oil and Gas
China is the world’s largest oil and gas importer. Due to the challenges renewable energy sources face and the advent of new oil and gas drilling technology, natural gas has speedily become a new favorite interim clean energy source. With the United States’ advantages in natural gas production, natural gas has become the most promising export to China for the U.S. energy sector.
Under the U.S. - China Phase One Trade Agreement signed in January 2020, China committed to buying at least $52.4 billion in additional energy purchases in 2020 and 2021. Despite the COVID-19 pandemic, China’s energy demand is expected to recover as industrial production returns to pre-crisis levels.
China is the world’s largest crude oil importer and the second-largest crude oil consumer. According to U.S. Energy Information Administration data, China’s crude oil imports in 2019 increased an average of 10.1 million barrels per day (b/d), an increase of 0.9 million b/d from the 2018 average.
China’s top five crude suppliers, Saudi Arabia, Russia, Iraq, Angola, and Brazil, generated nearly 60% of Chinese crude oil imports for 2019. Due to trade tensions, U.S. crude oil exports to China decreased 42.4% from 84,523,000 barrels (232,000 b/d) in 2018 to 48,680,000 barrels (133,000 b/d) in 2019.
Data from the U.S. Energy Information Administration (EIA) shows that from January to May 2020, the U.S. exported 45,950 barrels of oil to China, representing 2.9% of China’s crude imports. U.S. exports to China of crude oil peaked in 2018 at a high of 84,523 barrels.
Based on data from the International Energy Agency’s (IEA) Gas 2019 Report, natural gas is China’s fastest-growing major fuel, China’s demand for LNG quadrupled in the past decade. China is the world’s sixth-largest natural gas producer, the third-largest consumer, and the second-largest importer. In 2050, IEA expects that China will consume nearly three times as much natural gas as it did in 2018, which was 280.30 bcm.
A report from Oxford Institute for Energy Studies states that China’s natural gas accounted for 8.3% of its total primary energy mix in 2019. Before the COVID-19 crisis, China was expected to account for a third of global demand growth through 2022 thanks in part to the country’s “Blue Skies” policy and the strong drive to improve air quality. China’s relatively strong economic recovery from the COVID-19 crisis will probably increase that share to about 8.3% - 10% in 2020. Natural gas is imported either in gas form through pipelines or as liquefied natural gas (LNG) on ships.
China does not depend heavily on the United States as a supplier of LNG, but China has ranked among the top four customers of U.S. LNG every year since exports began in 2016. In 2018, China’s LNG import from the U.S. accounted for 4% of China’s total LNG import. It sharply decreased to 0.4% in 2019 due to trade tensions.
Liquefied Petroleum Gases
China is also the world’s largest importer and consumer of liquefied petroleum gases (LPG). A report by S&P Global Platts states that investments in petrochemical facilities that use propane as a feedstock have created an export outlet for U.S. propane supplies.
An article from Reuters notes that prior to the imposition of the 25% retaliatory tariff on propane and butane in 2018, the U.S. was the second-largest supplier of LPG to China in 2017, totaling 3.54 million mt, comprising 3.37 million mt of propane and 162,668 mt of butane.
According to EIA data, propane exports from the U.S. sharply decreased from 22,633,000 barrels in 2018 to 2,420,000 barrels in 2019 due to growing trade friction. From March to May 2020, China imported 8,343,000 barrels of propane from the U.S. as part of the Phase One Trade Agreement.
U.S. liquefied natural gas exports to China are expected to rise (as measured in million cubic feet) from 6,851 in 2019 to 38,839 in 2020.
Source: U.S. Energy Information Administration
China International Petroleum & Petrochemical Technology and Equipment Exhibition (CIPPE)
March 24-26, 2021, Beijing