A cold winter in China could be signaling a hotter market for a new wave of U.S. natural gas exports sooner than expected.
Cheniere Energy CEO Jack Fusco said Chinese demand for liquefied natural gas was up 40 percent year-over-year and should continue to be strong. He said the growth in demand is about the size of Cheniere.
"As we saw this winter, demand in Asia and China kind of surprised the market. What we saw was supposed to be a market that might not be hitting supply-demand balance until the mid-2020s," said Kevin Brown, research analyst at Tortoise Capital Advisors. "It's at a place now where we see the balance coming maybe earlier, in the 2020s, pushing people to have to make that second wave of LNG investment."
Since Cheniere's first LNG shipment went to Brazil two years ago, there's an even split between destinations in Latin America and Asia, and then the rest of the world. But every spare drop went to China recently, Fusco told the CERAWeek annual energy conference hosted by IHS Markit in Houston this week.
Fusco said there's secular change in China behind the demand growth. "They want — they need — cleaner air, and we see that shift longer term," he said. China's goal is to use natural gas for 10 percent of its needs by 2020, and it needs LNG to meet that demand.