Chinese natural gas consumption up 10 percent in 2018

A ResearchAndMarkets report shows that in China in 2018, the consumption of natural gas for power generation, household use, and industrial purposes increased significantly while the consumption of natural gas in the chemical industry decreased slightly. Preliminary estimates show that the consumption of natural gas in China exceeded 27 million cubic meters in 2018, registering a year-over-year increase of more than 10 percent.

In 2018, the Chinese government introduced several environmental protection policies to further prevent and control atmospheric pollution and replace coal with natural gas in key areas, which pushed up natural gas consumption in China. In 2018, the consumption of natural gas in provinces such as Hebei, Jiangsu and Guangdong all saw an increase of more than 3 billion cubic meters.

Restricted by reserves and exploitation conditions, the report determines that the production volume of natural gas in China has little growth potential. Insufficient domestic production forces China to import a large quantity of natural gas to meet domestic demand. In recent years, China's reliance on natural gas imports is rising sharply with the rapidly growing import volume of natural gas. In 2018, China surpassed Japan to become the world's largest natural gas importer.

LNG dominates China's natural gas imports. According to the report, the import volume of LNG in China reached 53.78 million tons in 2018, increasing by 41 percent year-over-year. Natural gas importers in China have signed many LNG procurement contracts with global natural gas suppliers. For example, in 2018, China National Petroleum Corporation (CNPC) signed LNG import contracts with Cheniere, Qatargas and Exxon Mobil; China National Offshore Oil Corporation (CNOOC) signed LNG import contract with Petroliam Nasional Berhad (PETRONAS). In addition, CNOOC's LNG contract with British Petroleum (BP) will be honored in 2019, which means that CNOOC's new LNG contract volume will exceed 10 million tons/year.

China is also building long-distance pipelines to facilitate the transportation and allocation of natural gas on the domestic market. At the end of 2018, the total length of China's long-distance natural gas pipelines was close to 76,000 kilometers, including the Erdos-Anping-Zhangzhou Gas Pipeline, Inner Mongolia-Shanxi Gas Pipeline, and Chuxiong-Panzhihua Natural Gas Pipeline (a branch line of China-Myanmar Pipeline), China-Russia East-Route Natural Gas Pipeline, and the Qianjiang-Shaoguan Natural Gas Pipeline.

Since natural gas is environmentally friendly and easy to transport and use, its demand in China is expected to continue rising from 2019 to 2023. As the growth rate of the production volume is far lower than that of the demand, the import volume of natural gas in China will keep growing from 2019 to 2023.