The average utilisation rate of China’s 17 LNG receiving terminals reached a healthy 66% in 2017, as LNG imports surged to 37.9M tonnes, a 48% jump on the previous year.
However, that rate does not cover the extent to which the regasification plants at the facilities were processing LNG but the ability of the terminals to receive and handle LNG cargoes. China’s regasification utilisation rate was considerably lower because 10.2M tonnes of the country’s LNG imports remained in liquid form and was despatched from the terminals to the final customer as LNG in cryogenic road tankers.
China is making up for its comparative lack of natural gas pipeline and storage infrastructure by utilising a fleet of 10,000 LNG road tankers and 40-foot ISO tank containers for onward distribution. This fleet expanded by about 20% in 2017, keeping ahead of the country’s overall demand for natural gas which rose by 15% year-on-year in 2017.
The Chinese road tanker and ISO tank fleet lifted around 19M tonnes of LNG last year. Some 9M tonnes comprised shipments loaded at China’s small-scale domestic liquefaction plants. The volume of LNG transported in road tankers and ISO tanks in 2017 was equal to 12% of the country’s gas consumption.
A major market for the road tanker deliveries of LNG is the product’s use as a transport fuel. Government policy aimed at reducing atmospheric pollution has encouraged the use of LNG to power heavy goods vehicles and larger municipal and commercial vehicles. One recent piece of legislation bans the transport of imported coal from the country’s northern ports to Beijing and other inland destinations in diesel-powered vehicles.
Approximately 96,000 LNG-powered vehicles were manufactured in China in 2017, a leap of almost 400% on the previous year’s 19,600 vehicles. Among the country’s LNG-fuelled fleet are most of the tractors used to haul the LNG road tankers and ISO tank/chassis combinations.
LNG is proving to be not only a more environment-friendly alternative to diesel but also one that has its economic attractions. With the cost of LNG in Asia down from its historic highs of a few years ago and oil prices on the rise, Chinese hauliers are now stating that they can recoup the 15-20% extra cost of an LNG-powered vehicle within 12 months. The calculation is based on the fact that LNG is currently about 40% cheaper than road vehicle diesel on an energy equivalency basis.
The growth in road tanker and ISO tank movements of LNG is not expected to slow anytime soon. Wood Mackenzie expects the fleet of specialised vehicles to continue to expand, to the extent that it will be able to transport 38 mta of LNG by 2025, or double the 2017 volume.
Of China’s LNG import terminals, the Tianjin facility of China National Offshore Oil Corp (CNOOC) currently has the busiest road tanker loading bays. The terminal loaded an average of 366 tankers/ISO tanks per day this past May, while daily loadings at second-place Ningbo were at 303 and third-place Zhuhai registered 188. The latter two terminals are also CNOOC facilities.
Earlier this month Sinopec celebrated loading its 100,000th road tanker/ISO tank at its Beihei terminal in southern China. That milestone has been achieved in the two years since the facility was commissioned, in April 2016. Daily road tanker loadings at Beihai are now running at a similar level to that of Zhuhai.