Sinopec technicians check facilities at a natural gas storage area in Puyang, Henan province.[Photo by Ma Hongshan/China Daily]
The National Development and Reform Commission has vowed to ensure a stable natural gas supply through boosting domestic yield while increasing LNG spot purchasing.
The country’s top economic planner also called for natural gas to be transported from China’s southern areas to ease shortages in northern regions, after the government reopened some coal-fired power plants and cut output from gas-fired generators, to ease a fuel shortage and heating problems in some parts of the north.
It said on Dec 18 it had asked State energy majors China National Petroleum Corp, China Petroleum & Chemical Corp and China National Offshore Oil Corp, to cut natural gas supplies to some industries, including chemical, methanol and fertilizer producers, by around 15 million cubic meters each day.
The government has coordinated with the three companies to increase supplies by raising gas output, boosting imports and speeding up infrastructure construction, Meng Wei, spokeswoman for the National Development and Reform Commission, said at a briefing on Dec 18.
China’s efforts to fight air pollution have led to a shortage of heating fuel supply in many northern cities this winter, leaving many people without heating while boosting the domestic price of natural gas to a three-year high.
Li Li, energy research director at energy consulting firm ICIS China, said that LNG terminals in China facing capacity bottlenecks and logistic constraints are one of the major reasons that led to the shortage of the clean fuel.
“One of the most significant contributors is the limited capacity of distributed gas storage infrastructure,” she said.
“It’s necessary we come up with massive gas storage facilities to avoid large scale gas shortages, which is very likely to happen in the face of cold snaps.”
The NDRC said it will closely monitor liquefied natural gas prices and urge local authorities to ensure the market operates smoothly.
The growing appetite for gas pushed domestic LNG prices to a record high of 9,000 yuan ($1,361) per metric ton on Dec 1 in some regions, according to Xinhua.
To secure a stable gas supply, China’s State-owned oil firms are maximizing production at domestic gas fields and the commission has urged companies to be self-disciplined in pricing.
According to the NDRC, liquefied natural gas consumption has witnessed sharp growth this year with national natural gas consumption reaching 209.7 billion cubic meters during the January-November period, a year-on-year growth of 18.9 percent.
Domestic natural gas consumption reached 133.8 billion cu m, a year-on-year increase of 10.5 percent, with its imported counterpart reaching 81.7 billion cu m, a year-on-year increase of 28.9 percent.
Consumption is expected to reach 230 billion cu m this year with 20 billion cu m coming from the coal-to-gas transition, said Xu Bo, senior analyst with China National Petroleum Corp’s Economics and Technology Research Institute.