Natural Gas China to Boost the Gas Economy

Editor: Dominik Stephan

With China’s natural gas consumption set to almost treble over the next eight years, the Asian giant will draw from all available sources to keep up with demand, industry analysts expect. As demand has long outstripped domestic production, the country's oil and gas industry looks for future deals abroad...

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(Picture: PROCESS)

According new researches by market analysts Global Data, China’s natural gas consumption was 131.7 billion cubic meters (bcm) in 2011, already a steep rise from the 2000 figure of 24.5bcm. However, consumption levels are predicted to soar even higher to reach 375bcm by 2020, thanks to the country’s desire to increase the share of natural gas in its energy mix.

China has substantial natural gas reserves of its own, but demand has already outstripped production, making imports essential. In 2011, China consumed approximately 131.7bcm of natural gas, though it only produced 100.9bcm – a disparity that will only grow in the future.

China Aims for Overseas Acquisitions

Accordingly, major Chinese National Oil Companies (NOCs) such as China Petrochemical Corporation and its subsidiary China Petroleum & Chemical Corporation (Sinopec), China National Petroleum Corporation (CNPC) and its subsidiary PetroChina Company Limited (PetroChina), and China National Offshore Oil Corporation (CNOOC) are actively involved in the partial or full acquisition of overseas assets in an attempt to guarantee long-term national gas security.

With crude oil reserves depleting and declining margins, the oil and gas industry eyes for alternatives. Natural gas, long–term poor cousin of the crude oil business, could bring a change, but is held back by the necessary infrastructure efforts it requires. Now the discovery of new gas fields in vicinity to the booming markets of Asia–Pacific fires the imaginations of oil and gas experts. Read more in Natural Gas Could Gradually Replace Crude Oil

The importation of Liquefied Natural Gas (LNG) is also set to be an important strategy in fulfilling China’s natural gas needs. In 1998 it approved its first LNG project in the Guangdong province to meet the energy shortages in the country’s south-eastern coastal area.

By the end of 2011, five LNG terminals were operating in China with a total regasification capacity of approximately 1 trillion cubic feet (tcf). This will climb to 2.8tcf by the end of 2016 at an Annual Average Growth Rate (AAGR) of 19.7%, due to the introduction of a further 11 terminals.

Chinese Industry Explores Shale Gas Opportunities

In March of this year, the Chinese government announced a new shale gas development plan, one of the stated aims of which is to produce 6.5bcm of natural gas by 2015. The government also announced that the country has onshore shale gas reserves of 134.4tcm and exploitable shale gas reserves of 25.1tcm (excluding the Qingzang Plateau area in the Tibet region) – a declaration that confirms China as one of the largest holders of shale gas reserves in the world.

Previously in December 2011, China stated the aim to produce 30bcm of Coalbed Methane (CBM) by 2015. 16bcm of this is expected to come from ground-based projects and the remaining 14bcm from coal mine projects.