Gulf News: China’s Vaulting Ambitions for Gas Usage

The story about oil in China is never complete unless it is coupled with the story about natural gas, which I would like to relate here.

Although gas consumption represents 5 per cent of total primary energy in China compared to coal’s 66 per cent and oil’s 20 per cent, the absolute value of consumption remains substantial, especially over the last decade. However, with the Chinese government planning to reduce coal’s share to 62 per cent and with the increasing availability of domestic and imported gas, gas consumption is projected to increase sharply due to its environmental qualities, efficiency of use and competitiveness.

The plan is to raise gas’ share to 10 per cent in the energy mix by 2020.

China holds gas reserves of 164 trillion cubic feet (tcf) according to EIA and 122.2 tcf according to BP. They are the largest in the Asia-Pacific region, but represent less than 2 per cent of the world’s.

China’s gas production grew from less than 1 tcf in 2000 to about 4.8 tcf in 2014. At the same time, consumption grew from less than 1 tcf to close to 6.6 tcf. In fact, China became a net importer of gas as of 2007.

Forecasters may differ about the future outlook but all agree that the trend is upward for gas demand. The IEA in its basic scenario forecast reckons Chinese demand at 10.4 tcf in 2020 and more than doubling to 21.3 tcf by 2040. There has been an increase of more than 5 per cent a year since 2012.

With huge investments going into domestic fields, conventional and non-conventional — including shale gas, coal bed methane and coal- to — gas, production in 2020 is likely to reach just over 6 tcf, according to IEA. This is short of the 6.5 tcf the government is aiming for.

In 2040, the forecast is for China to produce almost 13 tcf though the fall in crude oil prices may slow down development of shale and deep waters gas there. MORE