China’s Natural Gas Consumption Set To Fall For First Time In Two Decades

By Charles Kennedy of OilPrice.com

Natural gas consumption in China may fall this year for the first time in two decades, albeit moderately, because of the slowdown in the economy, Reuters has reported, citing officials from state energy companies.

According to a researcher with CNOOC, gas demand in the country could see a one percent decline this year, to 363.6 billion cubic meters. China is also expected to cede to Japan the title of the world’s biggest LNG importer as lockdowns have sapped demand for energy this year.

Winter demand for gas is also seen as weaker than usual, at between 168 billion and 190 billion cubic meters.

However, this does not mean that all gas imports will decline, according to the report. Imports of liquefied natural gas, which is more expensive, are already on the decline but pipeline gas imports from Russia and the Central Asian republics are on the rise.

“Our winter supply policy is stabilizing piped gas imports from Central Asia, boosting volumes from Russia, and increasing domestic production,” a PetroChina official told Reuters.

The higher imports will be used both directly and to fill storage, which currently equals just 7 percent of China’s total demand or 26 billion cubic meters. The gas from storage will be used at the height of heating season this winter if necessary.

Domestic gas production is also rising as the government pushes the energy industry to reduce its reliance on imported commodities. Despite these efforts, however, imports have been on the rise over the last decade, as has local gas production, Reuters’ John Kemp noted in a recent column.

Domestic production of natural gas has been rising at an annual rate of some seven percent over the past decade, turning into the world’s fourth-largest gas producer. Yet demand rose by a rate of around 11 percent during the same period.