Cooler temperatures and cooling economies are cited as reasons behind a sharp slowdown in LNG purchases by Japan, South Korea and China, the world’s leading importers, the U.S. Energy Information Administration (EIA) reported on Aug. 24.

The three countries combined to import an average of 18.2 billion cubic feet per day in 2015, the EIA said, or 5% less than the average in 2014.

Sluggish economic growth in 2015 diminished demand for natural gas in the power sector of those countries, leading to lower consumption of LNG. Lower temperatures attributed to the effects of El Niño also led to reduced consumption of electricity, which contributed to a lesser need for imports.

Some of the decline was offset by increased imports by other Asian countries, including India and Taiwan, which rank fourth and fifth in LNG consumption. However, the emerging Asian markets of Malaysia, Singapore, Thailand and Pakistan accounted for most of the region’s increase.

While the EIA expects future demand growth for LNG in China, India, Taiwan and emerging markets, an expansion of imports in Japan and South Korea seems unlikely.

“Japan’s total electricity consumption has fallen for five consecutive years, and nuclear generation is gradually returning to service, likely reducing natural gas use for electricity generation,” the EIA said. “In South Korea, government policies that favor the use of coal and nuclear over natural gas for electricity generation led to a greater use of coal-fired and nuclear power plants.”

However, the agency cited several reasons that China might be a promising customer:

  • Implementation of environmental policies promoting use of natural gas in the power, industrial and transportation sectors;
  • Availability of imported global LNG supply at relatively low prices; and
  • Growing capacity of LNG regasification.

The EIA expects Thailand to increase LNG imports because of its declining domestic production of natural gas and limited growth potential for pipeline imports from Myanmar. Demand growth could increase in Singapore if the country’s ambition to become an LNG regional trading hub reaches fruition; and Pakistan’s rapidly growing natural gas demand from its power and industrial sectors is expected to trigger a doubling of LNG imports.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.