China's LNG resilience hedges Hormuz risks

China is well-positioned to navigate potential short-term supply shocks to liquefied natural gas imports despite escalating tensions in the Strait of Hormuz, said a recently released industry report from BloombergNEF.

As the world's largest importer of LNG transiting this critical maritime artery, China has bolstered its energy security through healthy domestic stockpiles and a period of relatively low seasonal demand, it said.

According to the research and advisory firm, China's LNG imports through the strait averaged 400,000 metric tons per week last March, all sourced from Qatar. This volume represents approximately 24 percent of the total weekly LNG exports through the channel, underscoring China's role as a primary stakeholder in the waterway's stability.

However, China's current inventory levels provide a substantial cushion against immediate disruptions, it said.

By the end of February, China's LNG inventories stood at approximately 6.8 million tons — roughly 200,000 tons higher than the already elevated levels seen during the same period last year.

This surplus is attributed to an increase in effective gas volumes at the start of the heating season and a winter that was warmer than historical averages, which effectively capped consumption. Furthermore, inventory levels in underground gas storage facilities are also expected to exceed last year's figures, it said.

Current LNG stocks are significantly higher than the seasonal low of 5.4 million tons recorded last summer, offering a supply buffer of approximately three to four weeks. This preparedness comes at a vital time as the intensifying conflict in the Middle East forces some LNG carriers to bypass the Strait of Hormuz entirely, sparking fears of a global supply crunch.

These concerns were exacerbated by potential supply shocks following weekend military strikes in the region, which reignited anxiety over energy flows.

The Strait of Hormuz serves as a global lifeline for the supply of oil and LNG. Major Middle Eastern producers rely on this passage to serve Asian markets, according to data from Kpler.

Industry experts contend that a sturdy energy architecture anchored in strategic variety — combined with substantial emergency reserves — has forged a protective barrier capable of withstanding most maritime shocks.

Lu Ruquan, president of the China National Petroleum Corp Economics and Technology Research Institute, said that while an extended closure of the waterway would undoubtedly trigger global market turbulence, it is improbable that it would significantly undermine China's overall supply chain or import consistency.

The confidence of the world's largest energy consumer is rooted in a multifaceted strategy that prioritizes emergency stockpiles and a diverse array of import channels, he said, adding: "China's energy supply resilience continues to strengthen. While the nation's energy security is sensitive to global shifts, it is fundamentally not fragile."

While BloombergNEF believes a disruption lasting several months remains a low-probability scenario, China has already mapped out a "Plan B".

To bridge any potential gaps without overrelying on high-priced spot market LNG, Beijing should be prepared to pivot toward alternative sources, including ramping up domestic production, increasing pipeline gas imports and sourcing LNG from other global regions, it said.

The institute said China's energy autonomy is set to reach a milestone. With a national self-sufficiency target of 84.6 percent for 2026, the country is poised to produce 5.37 billion tons of standard coal equivalent this year.

This follows a high-performance 2025, where domestic output reached approximately 5.2 billion tons, said the National Energy Administration.

Lu said these collective measures — ranging from unconventional resource extraction to deepening land-based cooperation — ensure China's energy standing remains stable, even amid heightened geopolitical frictions in the Middle East.

While the nation's energy resilience is undergoing a rigorous stress test, this period is expected to ultimately result in a more robust security framework, he said.

zhengxin@chinadaily.com.cn