Global LNG Supply and Demand Projections

The Future of Natural Gas

• By 2020, Australia and the United States are expected to bring nearly 50% more LNG to global markets.
• LNG supply is set to increase by more than two-thirds in the next two decades.
• China has contracted for more natural gas in the coming years than it expects to use, even if it meets its objective of transitioning to a more natural-gas-intensive economy.

China's Foreign Policy

• The new energy abundance has given China an opportunity to rethink and revise core elements of its foreign policy.
• China's foreign policy is no longer driven by the need to secure energy resources abroad.
• This shift in foreign policy aligns China with the current international order, rather than pitting it against it.

The "Going Out" Strategy

• The "going out" strategy is an effort by the Chinese government to encourage Chinese companies to seek investment opportunities in resources beyond China's borders.
• The strategy was originally geared towards diversifying China's investments and introducing competition to some of China's largest state-owned firms.
• By the early 2000s, the strategy had shifted to seeking and obtaining equity oil investments worldwide, particularly in Africa and Latin America.

China's Investments in Africa and Latin America

• Between 2004 and 2010, Chinese NOCs spent nearly $30 billion on acquiring oil and gas assets globally, with nearly half of that sum invested in Latin America.
• In the decade following 2004, China invested more than $45 billion in exploring and producing oil and gas acquisitions in continental Africa.
• China's investments in Africa and Latin America have been seen as a challenge to Western efforts to promote good governance, environmental protection, and economic reform.

Case Studies

• Sudan: China invested substantially in Sudan's oil industry and imported more than four-fifths of Sudan's oil output. China's stance on Sudan was that it was an internal affair, and it did not want to impose on Sudan's internal situation.
• Venezuela: Between 2007 and 2015, Beijing loaned Caracas approximately $50 billion, most of it to be repaid in shipments of oil.
• Angola: In 2004, Angola broke off negotiations with the IMF and instead received a $2 billion loan from Beijing, granted at very favorable interest rates. Angola would repay the loan in shipments of oil over the following twelve years.

The Impact of China's "Going Out" Strategy

• The "going out" strategy has brought benefits to Latin America and Africa, including the construction of critical infrastructure and the rehabilitation of roads, railways, and airports.
• However, the strategy has also been perceived as a challenge to Western efforts to promote good governance, environmental protection, and economic reform in Africa and Latin America.
• The new energy abundance has called into question the value of the "going out" strategy, and China's foreign policy is shifting as a result.

This quiz assesses your understanding of the projected growth in global LNG supply and demand over the next few decades, including the role of Australia and the US in meeting increasing demand.