China's Gas Demand May Drop for the First Time in 20 Years - State Energy Officials Say

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China's Gas Demand May Drop for the First Time in 20 Years - State Energy Officials Say

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Flag of the People's Republic of China (© Shutterstock/Tatoh)
Flag of the People's Republic of China (© Shutterstock/Tatoh)

China's total gas demand is likely to plunge for the first time in two decades amid the dwindling economy as the country moves closer to winter, which will see energy demand rise modestly than it has been in previous years.

According to Li Jianping, a researcher with China National Offshore Oil Company, the country's gas consumption may drop by 1% in 2022 to 363.6 billion cubic meters, marking the first-ever annual decline witnessed in China since 2002.

China's gas consumption this winter is estimated to fall between 168 to 190 billion cubic meters. According to official remarks during a seminar hosted by a state-backed Chongqing Gas Exchange, the wide range is attributed to the uncertainties over the country's economic recovery and weather conditions.

While reducing high-cost LNG imports, companies are working to boost their domestic production, fill up their gas storage facilities, and increase imports of cheap pipeline gas from Central Asia and the Russian Federation.

"Our winter supply policy is stabilizing piped gas imports from Central Asia, boosting volumes from Russia, and increasing domestic production," said Li Wei, a gas market executive with PetroChina, the country's largest gas producer and importer.

Li added that PetroChina has already secured 109.5 bcm for the nearing winter, with 59 bcm sourced form domestic fields. Li predicted a higher gas consumption of about 187 to 190 bcm this winter.

Compared to 106.2 bcm in the previous winter, the supply pool of 109.5 bcm represents a slight increase of 3%, a drop from the 8% growth recorded in the winter of 2021.

Apart from PetroChina, Sinopec is also back to normal operation after completing regular maintenance,  pumping gas at full capacity from its major fields: Yuanba and Puguang, located in the southwestern Sichuan basin.

Sinopec is also filling up its LNG inventories at two major import terminals in Qingdao, and Tianjin, with storage level expected to reach at least 80% by mid-November.

So far, China has established a 26 bcm gas storage capacity, equal to 7% of the country's total demand to prepare for winter's peak heating demands, added  Li Jianping.

According to the officials, companies have set contingency plans to cut gas supplies to the "disreputable users," mostly commercial and Industrial users, to prioritize residential consumers this winter.

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