China's Waning LNG Demand Weakens Case for Planned Export Projects

Why China's LNG Appetite Is Cooling Just as New Supply Arrives

For years, China was the anchor of global liquefied natural gas (LNG) demand growth — the assumption that justified billions of dollars in export infrastructure from the US Gulf Coast to Qatar. That anchor is now loosening at an awkward moment: just as producers prepare a wave of new supply, Beijing is turning decisively toward domestic gas, pipelines and renewables.

The Iran war, the second global LNG supply shock in four years after Russia's 2022 invasion of Ukraine, has hardened China's drive for energy self-sufficiency. Analysts at JPMorgan, S&P Global and Wood Mackenzie have cut their projections for China's LNG demand growth in the early 2030s by between 14 million and 22 million tons. They now expect growth of 19 million to 53 million tons from 2025 to the early 2030s. Shell's latest outlook also lowered its low-case scenario for Chinese imports, to a peak of 120 million tons by 2035.

The shift is already visible in the data. China's LNG imports are on track to fall to between 61 million and 64 million tons this year, a second consecutive annual decline after 68.4 million tons in 2025. State energy major Sinopec halted its Tianjin LNG import terminal expansion in March, redirecting 4 billion yuan (about $590 million) into domestic gas production instead.

The stakes extend well beyond China. The International Energy Agency expects roughly 217 million tons of new export capacity to come online by 2030 — a more than 40% increase from current levels. Weaker Chinese demand erodes the need for up to 10% of that new capacity, which could influence final investment decisions on future projects. Most US projects expected in the coming years are still likely to proceed and find buyers, analysts say, but long-lead, high-cost developments face the greatest cancellation risk.

What Weaker Chinese Demand Means for US and Qatari Projects

China's Self-Sufficiency Drive Is Structural, Not Cyclical

The war-driven shock accelerated a shift that had been underway for years. Domestic gas output has grown at an average of 9.5% annually over the past 25 years, powered by unconventional resources such as shale gas and coalbed methane. At the same time, China's world-leading renewables build-out and continued coal-fired capacity expansion are suppressing gas demand in the power sector. PetroChina International's head of LNG and new energies, Zhang Yaoyu, put the challenge bluntly at a Doha conference in February: solar and wind costs have fallen so far that gas struggles to compete. S&P analyst Megan Jenkins expects this more conservative approach toward LNG to persist even after Persian Gulf supply is eventually restored.

Russian Pipelines Tighten Their Grip on Chinese Gas

Every pipeline molecule displaces a potential LNG cargo. The Russia-China Far East pipeline is due to begin deliveries in 2027, and JPMorgan analysts say recent developments have accelerated China's acceptance of the larger Power of Siberia 2 project. With Iran seeking new ways to control and monetize transit through the Strait of Hormuz, Beijing has added incentive to reduce LNG imports via that route — a geopolitical logic that strengthens Moscow's position in China's gas mix.

The FID Math for US and Qatari Projects

The IEA's expectation of roughly 217 million tons of new export capacity by 2030 was built partly on Chinese demand that now looks softer by 14 million to 22 million tons. Eurasia Group's Henning Gloystein says China's accelerating decarbonization and electrification will almost certainly affect LNG final investment decisions and lead to cancellations, especially for long-lead, high-cost projects. But he adds that most US projects coming online in the next few years should still find offtakers, since several Asian and European countries remain import-dependent. In short: near-term supply is largely safe; the most exposed projects are those further out on the cost curve.

Tariffs Redirect the Trade — and the Margin

The US-China tariff dispute, including Beijing's levy on US LNG, makes direct purchase agreements between Chinese buyers and US developers very unlikely, according to Wood Mackenzie's Huang Miaoru. Instead, Chinese buyers are expected to procure from portfolio players who source LNG from a variety of projects. That shifts some commercial flexibility — and potentially margin — to intermediaries, even as China remains the dominant driver of Asian and global LNG demand through the mid-2030s. US exporter Venture Global says it still sees strong, growing commercial demand in Asia; Cheniere declined to comment, and QatarEnergy did not respond to a request for comment.

Signals LNG Producers and Buyers Should Watch Next

For LNG developers, traders and analysts following the market, the key signals to track:

• Weigh final investment decisions for long-lead, high-cost projects against China's actual import trajectory: 61 million to 64 million tons expected this year, a second straight annual decline after 68.4 million tons in 2025.
• US developers should assume direct Chinese offtake stays blocked while Beijing's levy on US LNG remains in force; expect Chinese demand to reach the market through portfolio players instead.
• Use China's spot purchase threshold of $8–$9 per million British thermal units as a demand reference: prices must fall near that range to stimulate industrial coal-to-gas switching, which analysts say still depends on supportive Beijing policies.
• Track the Far East pipeline's 2027 start and any movement on Power of Siberia 2 as lead indicators of how much pipeline gas will displace incremental Chinese LNG demand.