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China is likely to import 10 million tons of liquefied natural gas (LNG) from the US in 2020 to fulfill the China-US phase one trade deal, more than four-fold compared with 2018, an industry insider told the Global Times on condition of anonymity.

The US may become the second-largest LNG supplier, surpassing Qatar and just following Australia in 2020 if China imports 10 million tons of LNG from the US, sources said.

With huge LNG imports, domestic natural gas producers are likely to undergo a reshuffle due to gas gluts and weak demand amid the novel coronavirus pneumonia (COVID-19) epidemic, sources said.

Although the domestic natural gas market is soft due to the COVID-19 outbreak, China will significantly increase its imports of LNG from the US this year, sources from China's three biggest oil companies told the Global Times.

Chinese companies can apply for exemptions of import tariffs on US products including LNG and crude oil, from March 2, according to a document released by the Ministry of Finance on Tuesday.

The duration of tariff exemptions is uncertain based on the new document, but it is good news for US suppliers to broaden their exports of LNG to China, Chinese analysts said.

At least until the end of 2025, China will not see a natural gas shortage. As more LNG is imported in the next few years, the price could go down further, and give rise to operational sustainability problems for some domestic gas producers. They may be confronted with the situation of merger and acquisition deals, the insider said.

Global energy consultancy Wood Mackenzie estimates a full-year gas demand reduction in China of 6-14 billion cubic meters (bcm) in 2020, depending on the length of time required to contain the outbreak. 

While big domestic gas fields like CNPC's Changqing Oilfield Co, which hit 4.2 bcm of natural gas production in January, try to maintain production for energy security, some small facilities are reducing their output sharply.

A small facility in Southwest China cut 400,000 cubic meters of daily gas production, down over one-third compared with before the epidemic outbreak, an employee at the plant said, asking to be anonymous.

China's natural gas sales, on the whole, are 20 percent down in the short term compared with before the viral outbreak, the insider told the Global Times.

Wood Mackenzie currently estimates the downside impact to Chinese LNG demand as between 2.6 million tons with recovery by April and 6.3 million tons in a more prolonged case.

The three biggest domestic oil companies are also seeking to declare force majeure on global long-term LNG contracts due to the viral outbreak.

"It's inconvenient to speak of details now, but I hope global suppliers truly understand the difficult circumstances," another insider from one of the three big domestic companies told the Global Times.