Rystad Flags 28 Bcm China CTG Target as Structural Drag on LNG Import Demand
With 20 Bcm/year of Chinese coal-to-gas capacity in development, Rystad says LNG exporters in Australia, Qatar and the US face a structural dampener on demand.
Around 20 billion cubic metres per year of new coal-to-gas capacity is currently under development in China, Rystad Energy reported on Sunday (2026-08-09), with existing conversion plants already running at above 90% utilisation. Most new projects are concentrated in Xinjiang, where mine-mouth coal averaged 214 yuan ($30) per tonne between April 2025 and May 2026, below 40% of equivalent prices in Inner Mongolia, Rystad data show.5
Rystad forecasts China's total CTG output will reach 9.4 Bcm per year by end-2026, then climb to 28 Bcm annually by 2030. The firm's analyst Xiong described CTG as "one of China's many hedges against a world where LNG supply is finite and politically sensitive," adding that at 28 Bcm "it remains a supplemental source, not a replacement for imports, but its steady growth means every LNG exporter targeting China should model it as a structural dampener on demand." The warning is directed at producers in Australia, Qatar and the United States.5,4
The CHN Energy Zhundong project in Xinjiang is one measure of how large individual investments have become. The facility is rated at 2 Bcm per year, expects to begin production in 2027 and includes electrolytic hydrogen integration, wastewater recycling and planned carbon capture of 550,000 tonnes per year — a profile designed to fit China's broader energy and environmental commitments.5
China's 15th Five-Year Plan for 2026 explicitly backs the CTG expansion as part of a wider effort to reduce import dependence and insulate supply chains from geopolitical disruption, according to Rystad. Policy support, alongside the regional cost advantage in Xinjiang, gives the build-out a basis that persists even when LNG spot prices decline.4
Wood Mackenzie analysts framed China's broader gas posture in similar terms in June 2026, describing Beijing as moving away from its role as a steady LNG demand sink and toward a price-responsive balancer that adjusts import volumes based on market conditions. When prices are low, Chinese buyers import more; when prices rise, they pull back. A growing domestic CTG base expands the range over which that adjustment operates.2
JKM front-month, the Asian spot LNG benchmark, stood at $21.26 per MMBtu on Tuesday (2026-08-11). At that price, imported LNG remains competitive in the Chinese market, but the Xinjiang projects advancing now are backed by sunk capital and government policy rather than short-term price signals.5,4
Australian producers are already in a weakened competitive position before China's CTG build-out gathers pace. LSEG seaborne LNG data showed Australian volumes fell to 65.8 Mt in the first ten months of 2025, down from 67.7 Mt in the equivalent period a year earlier, a 2.8% decline, while global LNG trade grew 5.2% year-on-year over the same stretch.1
Japan absorbed more Australian LNG, lifting its intake 4.7% year-on-year to 22.2 Mt, and South Korea's imports surged 28% to a record 12.5 Mt. But Australian output has been locked in a narrow monthly range of 6.2 to 7.2 Mt with little structural growth, LSEG data show. A slowdown in Chinese import demand removes one of the few potential growth markets Australian sellers have been able to count on.1
Qatar faces the additional constraint of damaged infrastructure. Industry assessments through May 2026 indicated that repairs to LNG Trains 4 and 6 at Ras Laffan Industrial City could require three to five years, with the destruction removing roughly 12.8 million tonnes per year of export capacity, the Oil & Gas Journal reported. Rebuilding market share in China during that recovery period becomes harder as Beijing's domestic production base grows.3
For Chinese gas buyers, the first concrete test of Rystad's demand thesis arrives when projects like CHN Energy Zhundong begin producing gas in 2027. Nationally, CTG plants are already above 90% utilisation. If new capacity meets its schedule and China absorbs the incremental volumes domestically, Australian, Qatari and US exporters will be competing for a Chinese import market structurally smaller than their supply plans currently assume.5