NDRC calls for increase in gas imports to guarantee supply

Updated: 2013-10-15 07:37

By Du Juan (China Daily)

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Amid growing demand for natural gas, China's top economic planner has called for an increase in imports and stronger cooperation with Central Asian countries to ensure a stable supply in the coming winter.

The National Development and Reform Commission said on its website on Monday that China will further hold talks with Central Asian countries which significant natural gas resources to increase pipeline gas imports in the winter, when an energy shortage usually hits the country.

Meanwhile, the top-three domestic oil and gas companies are also being urged to accelerate the pace of construction of their natural gas infrastructure projects, including pipelines and liquefied natural gas receiving terminals, to boost supply.

China National Offshore Oil Corp - the largest offshore oil explorer and LNG importer - should accelerate its LNG projects in Zhuhai, Guangdong province, and in Tianjin municipality, said the NDRC.

"CNOOC should strengthen its cooperation with other companies to increase natural gas supply for the West-to-East pipeline and the Shannxi-to-Beijing pipeline in addition to meeting the current demand," said the NDRC in the statement.

China's West-to-East natural gas pipeline is owned by China National Petroleum Corp, the country's largest oil and gas producer.

The commission also asked CNPC to increase pipeline gas supply by making full use of its LNG receiving terminals in Rudong, Jiangsu province, and in Dalian, Liaoning province.

As China's industrialization and urbanization drive accelerates and the country raises its standards for environmental protection and carbon reduction, natural gas consumption has been rising quickly in recent years.

However, due to the outdated infrastructure and inadequate natural gas storage capacity, it has become a harsh task to ensure natural gas supply in the winter.

And due to the government's recent strict policy to deal with air pollution, the demand for the clean energy, such as natural gas, has been soaring in many provinces.

The NDRC expects China to face an even more severe natural gas shortage in the coming winter and next spring compared with previous years.

The government is working on developing unconventional natural gas resources to supplement the clean energy supply.

The NDRC is asking some companies in the sector to accelerate their coal gas projects in the Inner Mongolia and Xinjiang Uygur autonomous regions, and their shale gas projects in Chongqing, in a bid to increase unconventional natural gas supply.

At the same time, China Petrochemical Corp and CNPC should boost their new natural gas capacities in Xinjiang, Qinghai and Sichuan, said the statement.

CNOOC is responsible for a natural gas production project in the Liwan 3-1 gas field in the South China Sea.

The project, with an annual production capacity of 12 billion cubic meters, was completed in May and the company said it will be put into operation by the end of the year.

The project's production capacity accounts for about 10 percent of China's current natural gas output, and will ease the gas shortage in southern China, according to Li Lingxuan, an industry analyst at Sublime China Information Co Ltd, which provides information on the commodities industry.

"Because of the LNG shortage, its prices in the market will rise and the government's priority of ensuring residential-use natural gas supply will lead to instability in natural gas supply for power generation and industrial use," said Li.

China's full-year natural gas consumption in 2013 will reach 165 billion cu m, up 14.1 percent year-on-year, according to energy information consultancy ICIS C1 Energy.

ICIS C1 estimated that China will produce 114.6 billion cu m of natural gas this year, an annual growth rate of 9 percent.

Last year, the country's natural gas production growth rate was at 5.1 percent.

China's imports of natural gas are expected to account for about 30.5 percent of its total consumption this year, a year-on-year rise of 4.36 percentage points over last year, according to the consultancy.