China’s Pursuit of Natural Gas Jolts Markets and Drains Neighbors

China’s Pursuit of Natural Gas Jolts Markets and Drains Neighbors

China's quest to anchor its industrial growth to cleaner energy is whiplashing global prices of liquefied natural gas, reshaping trade in the world's fastest-growing fossil fuel and raising fears of power blackouts in neighboring economies competing for the resource.

A sudden confluence of global supply outages and an unusually cold winter tripled LNG prices in mid-January to a record $32.50 a million British thermal units from early December—and brought into focus China's increasingly outsize role.

Underpinned by its economic boom and rising presence in LNG spot markets, Beijing's efforts to shift from coal to gas as a fuel over the longer term has drawn ever-larger LNG imports in recent years, tightening supplies available to gas-dependent neighbors Japan and South Korea. The three economies account for 60% of the world's LNG consumption.

China's voracity worsened a natural-gas shortage in January in Japan—which China last year outstripped as the world's largest LNG importer—that put parts of Japan at risk of blackouts. In December, China imported 7.6 million metric tons,