China's demand for natural gas set to accelerate

China’s domestic natural gas demand is set to grow faster this year, gaining 10 percent, Argus reports, citing state-owned energy majors PetroChina and Sinopec.

A senior PetroChina gas executive said demand for natural gas will be driven by the utility sector as gas-fired power plants ramp up production to back up intermittent solar and wind capacity.

According to the executive, the country’s demand for natural gas will hit 350-356 billion cubic meters this year. Sinopec has almost identical numbers, expecting gas demand at 350-360 billion cubic meters. According to the major, the demand would come from power utilities and the industrial sector.

In 2020, China consumed 326.2 billion cubic meters of natural gas, of which 192.5 billion cubic meters came from domestic production. This was almost 10% higher than the domestic production figure for 2019. Imports also rose in 2020, by 5.3% to 140.3 billion cubic meters.

LNG imports specifically jumped by 10.3% over the first eight months of the first pandemic year as the Chinese economy rebounded a lot more quickly than others. As with oil, China was the driver of the recovery in gas demand last year.

For this year, domestic production plans are for 202.5 billion cubic meters, which would be 5.2% higher than the 2020 figure. Of this total, PetroChina is seen producing 133.8 billion cubic meters. Sinopec, a much smaller gas producer, plans to extract 34 billion cubic meters of natural gas this year.

Even so, some in the gas industry in China are worried that demand is growing more slowly than it should. A recent poll carried out by Verdict and cited by Offshore Technology showed that for 35% of China’s gas and LNG industry, slow demand growth was the biggest concern. This was followed by LNG import project delays, which were the top concern for 21%.

This article was originally published on Oilprice.com