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China's Divergence from US LNG
According to SynMax Leviaton data, China's liquefied natural gas (LNG) imports from the United States plummeted by 90% in 2025, falling from 133 BCF during January-August 2024 to just 13 BCF in the same period this year. This decline occurred as China's total LNG consumption decreased to 2,120 BCF year-to-date from 2,550 BCF in 2024, a 16.9% year-over-year reduction. The U.S. share of Chinese LNG imports dropped from 5.22% to 0.61%, a decline of 4.6 percentage points. The last significant U.S. LNG cargo to reach Chinese terminals was delivered in February 2025, just before the escalation of trade tensions.
While many factors—from weather and tariffs to economic conditions—have been used to explain this situation, a key, often-overlooked factor is China's accelerating domestic gas production. Before we discuss that, let's highlight what is happening on the international LNG front.
Chinese companies hold approximately 9.5 MTPA of long-term contracts at U.S. LNG export facilities. Historically, these volumes were delivered to a mix of Chinese and European destinations, with Chinese companies using destination flexibility to optimize their portfolios. However, since March 2025, this pattern has shifted completely. Chinese-contracted volumes are now being entirely diverted away from Chinese terminals and delivered exclusively to European and other Asian markets.
The scale of this redirection is evident in Chinese companies' contract positions at three U.S. terminals. These 9.5 MTPA of annual contracted volumes, equivalent to approximately 463 BCF annually or 135 LNG cargoes, previously supported both Chinese domestic demand and European trading operations. They are now being delivered solely to non-Chinese markets. This figure represents only direct Chinese company contracts and does not include portfolio buyers that have contractual agreements with Chinese companies, suggesting the total redirection may be even higher.
The clearest example of this strategy is Venture Global's Plaquemines facility. China Gas and Sinopec hold approximately 4.0 MTPA of contracts as Phase 1 customers, yet no Chinese entity has received a cargo since commercial operations began in December 2024. Despite this substantial contract position, Leviaton cargo flow data shows European markets have captured the majority of Plaquemines cargoes since its startup. Only four cargoes have been offloaded outside Europe—two in Japan and two in Bahrain—while the rest have flowed to European terminals, including Germany (122.5 BCF), Belgium (51.6 BCF), France (51 BCF), and the Netherlands (49 BCF).
This pattern suggests the Chinese contracts have likely been resold or an agreement has been made to market the volumes to others through a sharing mechanism. The data confirms a systematic diversion strategy from other terminals as well. The PetroChina-chartered vessel KUNLUN, which maintained regular Corpus Christi-China loadings throughout 2024, now exclusively serves European and other Asian destinations. Similarly, the WUDANG has completely abandoned Chinese destinations, instead delivering to Germany, France, and Bangladesh. The ENN Energy-chartered BW ENN CRYSTAL SKY has pivoted entirely away from U.S. LNG, switching to Qatar sourcing for its Asian market deliveries.
This redirection has created a fundamental shift in global LNG trade patterns. Chinese companies have maintained their total LNG import volumes at 2,120 BCF year-to-date while systematically eliminating U.S. dependence by replacing American supplies with sources from the Middle East, Australia, and other parts of Asia.
The Rise of Domestic Production
Natural gas production growth in China has accelerated in 2025. Year-to-date natural gas production is higher by 1.7 Bcf/d, the highest year-over-year output growth seen in at least five years, reducing the country's need for imported LNG.
China is using hydraulic fracturing, or fracking, and related unconventional techniques to produce additional natural gas, especially from its shale gas basins. The country has developed its own fracturing theory, fluid systems, and tools better suited to its more complex geological conditions. The Sichuan basin has been a leader in China’s natural gas production growth, with fracking being the primary driver. There have also been breakthroughs in producing from deeper formations in the Low Cambrian formation in the Sichuan basin at depths exceeding 15,000 feet. Additionally, the government has implemented favorable policies and tax incentives to encourage shale gas development. Natural gas production growth from fracking in China is expected to continue accelerating toward 2030 and could be a game-changer in the global LNG market. As an example of growth, in September 2025, Sinopec announced successful test production exceeding one million cubic meters per day from two appraisal wells in the Ziyang shale gas field as part of its "Deep Earth Project - Sichuan-Chongqing Natural Gas Base" development program.
The evolution of U.S. shale gas production provides a potential roadmap for how China's production could develop. The pattern of technology adoption in oil and gas is similar to other sectors: a long journey to achieve significant penetration, followed by a period of rapid expansion. For example, it took over nine years for shale gas to reach just 15% of U.S. gas production. However, in less than two years, it surpassed 30%, and what was once considered unconventional quickly became the majority of production.
China’s geology is tighter, but its economic incentives are much greater than those in the U.S., and its capability for state-driven infrastructure development is far superior. With JKM trading north of $11/mmbtu, China's economic incentives are double to triple that of the U.S. It is not unreasonable to consider a scenario where China replicates U.S. history and converts some of its regasification terminals to liquefaction facilities. In addition if Russia pipeline supply grows for China, it could be the domestic shale gas production that eventually enables China to become a net exporter, fundamentally altering global trade patterns.
