Exxon eyes China LNG downstream opportunities

(Reuters) - Energy major ExxonMobil sees China as a strong long-term growth market for LNG despite a recent slowdown in demand there and is looking at potential downstream opportunities in the country, an executive said on Wednesday.

"We are talking about different downstream market opportunities and also investments in the downstream in China," Andrew Barry, vice president global LNG marketing at the U.S.-based company, told Reuters in an interview on the sidelines of the Gastech conference.

"We are progressing those, particularly Guangdong. We are in discussions and are working through opportunities," he said, referring to the economic powerhouse province in southern China but declining to elaborate further.

LNG is fuel that is super-cooled for shipment and then regasified, and "downstream" typically refers to processing, terminals, sales and distribution.

China lost its crown to Japan last year as the world's biggest LNG importer as a COVID-curtailed economy and surging spot prices due to spiking European imports in the wake of Russia's Ukraine invasion curbed demand.

It was the top importer in the first half of 2023.

"We expect to see (China) demand to come back, probably quicker than Europe," Barry said. "Some of the demand destruction that’s happened in Europe is potentially a bit more sticky."

While the global LNG market is well-stocked, he said it was thinly balanced and winter weather would dictate prices.

If Asia-Pacific buyers come into the market at the same time as Europe, "you get that competition and that's going to create volatility," Barry said, echoing comments made by others during the Gastech event.

He noted potential strikes at LNG plants in Australia recently sent European prices up 30% to 40%.

"When you have a thinly balanced market, these potential smaller activities can then create some volatility," he said.

Barry added that the industry would continue to see a challenging supply situation in the next couple of years before new LNG projects come online, given demand from Europe to replace Russian gas and the time it takes to build liquefaction plants.

"We've got probably still a couple of years of a challenging supply situation," he said.

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