China's LNG consumption in the second quarter is project to increase in West China, including Xinjiang, Gansu, Qinghai, Ningxia, Shaanxi and Inner Mongolia, mainly due to a significant rise in vehicle LNG demand, according to OilChem.
The LNG consumption in West China is expected to reach 3.07 million tonnes in the second quarter, an increase of 52% year-on-year and 21.38% quarter-on-quarter, data from OilChem showed, as the surging heavy-duty LNG truck sales boosted vehicle LNG demand.
At the same time, the LNG production is estimated to be 3.86 million tonnes, up 24.44% year-on-year and 25.73% quarter-on-quarter, driven by sufficient feed gas supply after the heating season, as well as the commissioning of new LNG plants, including Inner Mongolia Wanrui Natural Gas' 1 million cubic meters per day plant, Xinjiang Dexin Hengyang Gas' 1 million cubic meters per day plant, and Ningxia Jiucheng Natural Gas' 500,000 cubic meters per day plant.
The sales-output ratio of domestic LNG plants in the western region is expected to jump 15 percentage points year-on-year to 79% in the second quarter, due to strengthening local consumption with the increase in LNG heavy-duty truck sales.
Source: OilChem
The sales of heavy-duty LNG trucks have maintained momentum in 2024, with the volumes over January-April reaching 71,700 units, equalling to 47% of the total sales in 2023. This was attributed to the attractive LNG prices than gasoil, with the retail price difference between the two reaching Yuan 2.76-3.40/ cubic meter in the second quarter.
Source: OilChem
Note: 1) The LNG prices are based on mainstream retail prices within the region, while the gasoil prices are the retail ceiling prices set by the government.
2) Driving the same distance requires the same amount of heat, taking a calorific value of 11,000 kcal/kg on LNG and 9,181 kcal/L on gasoil. The LNG has economic benefits when the theoretical price of LNG is not higher than 1.2 times the price of gasoil.
3) Considering that the cost of purchasing and maintaining heavy-duty LNG trucks is higher than that of heavy-duty gasoil trucks in actual operation, the LNG has economic benefits when the price of LNG is not higher than the price of gasoil.
Looking ahead, with the firm price advantages, the LNG-fuelled heavy-duty trucks will further replace the gasoil-fuelled heavy-duty trucks in the second half of 2024. Especially the approaching "Golden September and Silver October" in the chemical market will stimulate the demand of freight logistics by heavy-duty LNG trucks, which is expected to further lift the LNG demand in the west part of China.
Moreover, with abundant natural gas supply, the LNG production will increase further in the western region, as some plants are expected to come on stream in the third quarter, including Ningxia Tianlifeng Energy Use's Phase II of 2 million cubic meters per day plant, Inner Mongolia Tianlifeng Gas' 1 million cubic meters per day plant, and Shaanxi Zhongsheng Energy's 2 million cubic meters per day plant.
Written by Sunny Fang, fss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com