Plans introduced by the Chinese government to ease restrictions on natural gas pricing could lead to a dramatic rise in imports from the U.S., according to Bloomberg.
At present, the Chinese government places strict limits on the price of natural gas, creating strong disincentives for the importation of the fossil fuel, since dealers would ultimately sell at a loss.
A pilot program in Guandong and Guangxi provinces, however, has linked natural gas prices to crude oil futures, allowing prices to better reflect domestic demand. Since December, gas prices in the provinces have averaged around $12 per million British thermal units, or nearly five times the current price in New York and six times the recent lows.
This will immediately make China an attractive export target for U.S. natural gas producers.
"China will be seriously importing gas from North America as it offers potentially lower prices compared to other sources," Neil Beveridge, an analyst at Sanford C. Bernstein, told Bloomberg. "There is a lot of interest from Asian buyers, but the question is very much a political one in terms of how much the U.S. will allow to export."
Despite this potential, The Australian reports the prospects for Australian liquid natural gas exports remains strong, particularly given its lead in LNG facilities.