China recently stopped importing scrap plastic, which it recycled to feed domestic demand for bottles, packaging and consumer goods, while launching an environmental crackdown that has curtailed the use of coal and shut down industrial polluters. As a result, China needs more natural gas, plastic, and petroleum products — a need Houston companies are rushing to fill.
Already, the liquefied natural gas exporter Cheniere Energy has signed a deal with the state-owned China National Petroleum Corp. to ship 1.2 million tons of LNG a year — the equivalent of six days production in West Texas’ Permian Basin — under contracts that extend through 2043. Petrochemical companies have their eye on China, too, as they expand plants and production to capitalize on the stream of cheap natural gas, a petrochemical feedstock, flowing from Texas shale fields.
China’s ban on scrap plastic alone could boost global demand for ethylene, a building block of most plastics, by as much as 4 million tons a year for the next several years, said Hassen Ahmed, a petrochemical analyst with the research firm Alembic Global Advisors. Meanwhile, all along the Gulf Coast, companies are completing massive projects that could increase the output of ethylene and polyethylene — the most common plastic — by millions of tons each year.
"It’s not coming online for the domestic market," Ahmed said. "It’s coming online with an eye to the export market."
China’s growing hunger for oil, natural gas and their many derivatives is adding to the global demand transforming the Gulf Coast into an energy exporting powerhouse rivalling the Middle East. Last year, petroleum exports through the Port of Houston surged by 40 percent to $30.5 billion, according to the Commerce Department. Chemical exports climbed by 12 percent to more than $10 billion and plastics by 4 percent to about $6 billion.
China has for years led the world in energy consumption and now accounts for about quarter of global demand even as it works to incorporate cleaner and more efficient sources into the mix. The U.S. Energy Department projects that the country’s demand for natural gas in the coming decades will also grow the fastest worldwide, nearly tripling to 57 billion cubic feet a day — the entirety of Cheniere’s annual delivery — by 2040 as a consequence of its need to generate power, chemicals and plastics from sources other than coal, the main cause of an air pollution crisis that has killed thousands of Chinese.
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