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Natural gas serves growing portion of Chinese energy demand

Hydrocarbon Engineering,

According to the US Energy Information Administration (EIA), China relies heavily on domestic coal to meet rising energy consumption. In order to reduce air pollution and carbon dioxide emissions, the Chinese government is attempting to replace some of the country’s coal and oil use with natural gas.

Natural gas accounted for only 4.9% of China’s total energy consumption in 2012, but large investments in domestic natural gas production and infrastructure, along with growing imports, are likely to underpin a significantly larger role in the future. The government anticipates increasing its natural gas share of total energy consumption to approximately 8% by the end of 2015 and 10% by 2020.

China has more than triples natural gas production since 2003, producing 3.8 trillion ft3 in 2012. The government is targeting production to reach approximately 5.5 trillion ft3/y of natural gas by the end of 2015. Most of the anticipated production growth is from large onshore fields in the eastern and north central regions of China as well as from offshore deepwater regions in the South China Sea.

China’s natural gas consumption has outstripped domestic supply since 2007, leading to rising imports of LNG and pipeline gas. China’s natural gas consumption rose at an average annual rate of 17% from 2003 through 2013, reaching nearly 5.7 trillion ft3 in 2013.

The EIA highlights that China imported nearly 1.8 trillion ft3 of LNG and pipeline gas in 2013. Imported natural gas met 32% of China’s demand for the year, up from 2% in 2006. China is rapidly developing its LNG import capacity in the urban coastal areas and currently has 10 major regasification terminals with 1.7 trillion ft3 capacity.

In 2013, China rose to become the third largest LNG importer in the world, after Japan and South Korea, and in 2013, the country imported 870 billion ft3 of LNG. Estimates for the first half of 2014 show LNG imports growing at faster levels than in previous years.

China is also increasingly investing in natural gas pipeline infrastructure that will link production areas in the western and northern regions to demand centres along the coast. This new infrastructure will accommodate greater imports from neighbouring countries.

In 2010, the first pipeline imports from Turkmenistan flowed to China through the Central Asia Gas Pipeline (CAGP), and by 2013 natural gas supplies from Turkmenistan, Uzbekistan and Kazakhstan reached 974 billion ft3.

China and Russia recently finalised a natural gas agreement that allows China to purchase and transport gas from eastern Russia through a proposed pipeline. The deal, valued at US$ 400 billion, will supply China with up to 1.3 trillion ft3/y of natural gas, starting in 2018.

Adapted from a press release by Emma McAleavey.

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