China’s Natural Gas Consumption Shows Rampant Growth

LNG carrier

LNG carrier. Credit: Creative Commons/QatarGas

The International Energy Agency last month has released some amazing facts and figures about China’s natural gas consumption growth pattern. It says China will account for almost 40% of the global annual growth of natural gas demand in the coming five years.

The Chinese government is strongly pushing forward its cleaner energy agenda and the targets to produce 10% of its energy needs with gas by the year 2020, which was 5.9% in the year 2015.

It is a fact that even as of today, China consumes nearly 50% of the world’s coal production and is one of the worst air polluting countries, but the government is now aiming for a paradigm shift. The basic reason for rising imports of gas is China’s  domestic output production costs, as they are much more than long-distance imports, including liquefied natural gas imported by the way of tankers. China does have a single giant gas field and is a major disadvantage causing high production costs, also the gas resources are very unevenly spread and remote from demand centres. Even Government-set prices are among the highest in the world.  Another reason for the high domestic prices is, in China gas production is a monopoly of the three state-owned giants, CNPC, CNOOC, and Sinopec. Since these three do not have any competition, they are not bothered about efficiency improvements and cost reductions. The Government has now laid policies in supporting and promoting the huge investments likely to come by companies from Russia, Australia and the U.S., especially to build gas pipelines and infrastructure required to feed the ever growing demand of gas in the Chinese market.

In the first half of the year 2017, China imported most of LNG  from the world’s top two exporters, Qatar and Australia. But soon the U.S. companies are likely to enter the country. The demand for gas in China is skyrocketing and it is expected to increase by 5-6 million tons annually. As per the Chinese government official report in the first six months of this year, the imports surged by 38.3 percent, to 15.89 million tons.

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