Over the past month, U.S. LNG has encountered something unfamiliar: a steady stream of (mostly) good news. Pfizer and Moderna have announced an apparent breakthrough in a vaccination for COVID-19, Northeast Asian markets continue to control COVID, European LNG demand is steady, and, finally, Chinese buyers have even inked an agreement with Cheniere. In this article, we discuss implications of Chinese and Indian LNG demand for the United States LNG complex, and prospects for additional agreements.

China and India are the world’s two largest countries by population, and the two most important sources of future LNG (and energy) demand. We expect that rising demand in these two countries will have a sizable, but only indirect, impact on U.S. LNG exports. The Chinese market will likely remain semi-closed to U.S. exports due to structural political tensions, and geographical distance/transportation costs will limit Indian imports of U.S. LNG. The rate of coal adoption in China and, to a lesser extent, in India, is of great concern for the future of LNG.  

Chinese and Indian LNG demand is growing

Nearly every indicator suggests that future Chinese and Indian LNG demand will increase. Despite some of the worst economic conditions in living memory, the most recent import data shows Chinese and Indian LNG demand has grown by ~13% and 1%, respectively, from year-ago levels. With LNG demand showing resilience during the pandemic, imports will likely pick up in future years once macroeconomic growth improves.