China faces gas oversupply through 2017
China “Short-term drivers [of low demand] include low oil prices and high domestic gas prices, reversal of environmental policies, competition from coal and hydro and warmer winter weather. Structural factors include the switch from industrial production to the service sector as a driver of economic growth,” said Wood Mackenzie’s principal gas consultant, Gavin Thompson.
From now until 2017, the company expects an oversupply of nearly 18 bcm (636 bcf) resulting from the fall in gas demand along with increased LNG contracts.
Chinese national oil companies are renegotiating ramp-up schedules and pricing terms, as well as reselling gas into the Pacific market in an effort to reduce volumes.
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