With a year-on-year increase of 30.4%, China's natural gas consumption once again saw explosive growth in August this year. At the ECF International Shale Gas Forum currently held in Shanghai, industry experts stated that the booming consumption market will continuously drive up import demand, and China's reliance on imported natural gas is expected to steadily increase. However, on the supply side, China's unconventional natural gas production is gradually gaining momentum, with promising future potential. Oil and gas are known weak points in China's energy resource structure. With the continuous growth in domestic energy consumption demand, China's import dependency for crude oil and natural gas has been steadily rising in recent years. In 2016, due to declining domestic output and a surge in imports, China's foreign crude oil import dependency rose to 65.4%. Although China's natural gas production has maintained rapid growth, the domestic consumption market has grown even faster, also showing an upward trend in import dependency. In 2016, China's natural gas import dependency had already reached 35%.
The latest data released by the National Development and Reform Commission shows that from January to August this year, China's natural gas output reached 97.8 billion cubic meters, a year-on-year increase of 10.8%; natural gas consumption was 150.4 billion cubic meters, up 17.8%; and natural gas imports reached 57.0 billion cubic meters, a rise of 24.8%. Policy and price are the two major factors influencing China's natural gas consumption. The explosive growth in natural gas consumption this year is largely related to the "coal-to-gas" projects vigorously promoted across various regions.
Huang Qing, ICIS China Gas Value Chain Information Director, stated that 2017 was a critical time for many large-scale "coal-to-gas" projects, leading to a surge in new gas demand. Additionally, this summer, domestic gas prices were more economical compared to oil prices, which kept natural gas consumption robust even during the off-season. It is anticipated that driven by "coal-to-gas" initiatives and "clean energy heating," China's gas demand will be even stronger this winter, posing greater pressure on supply guarantees.
Experts believe that, driven by strong demand, a further increase in China's natural gas import dependence is an inevitable trend in the coming years. However, with global natural gas resources currently in a state of oversupply, there is no need to be overly concerned about China's natural gas supply security. Zhang Yousheng, Deputy Director of the Energy Research Institute of the National Development and Reform Commission, said that natural gas currently accounts for only about 6% of China's primary energy mix. According to the plan, the aim is to reach approximately 10% by 2020 and strive for 15% by 2030. This means that China's natural gas consumption is expected to reach 700 billion cubic meters by 2030.
From a global perspective, natural gas demand in developed countries in Europe and America is approaching its peak, with limited room for growth. In contrast, China is gradually becoming a major growth pole for global natural gas consumption. In an international natural gas market with oversupply, more international natural gas resources are looking to flow to China, and our country's options for natural gas imports are becoming increasingly diverse.
Huang Qing stated that currently, China's liquefied natural gas (LNG) imports primarily come from Australia, Qatar, and Malaysia, among other places. In the future, Canada and the United States are also expected to become important LNG import sources for China. However, international spot LNG prices fluctuate significantly, and enterprises procuring overseas should pay attention to their strategies to mitigate risks. For example, this summer, the average price of LNG imported by China was about $5.5 per million British thermal units (MMBtu), but it typically rises to around $9 in winter.
"Currently, many international natural gas suppliers are optimistic about China's natural gas market and even hope to participate in the construction of China's LNG receiving terminals," Huang Qing said. Typically, a large LNG receiving terminal requires an investment of 7 billion to 10 billion yuan. Attracting international suppliers to participate not only helps alleviate financial pressure but also secures gas sources. Facing the enormous domestic natural gas demand, China's natural gas supply cannot solely rely on "external assistance." In recent years, China's conventional natural gas production has maintained rapid growth, and unconventional natural gas production is gradually gaining momentum, with promising potential.
Zhang Dawei, Director of the Mineral Resources Reserves Evaluation Center of the Ministry of Land and Resources, stated that China's shale gas output reached 7.882 billion cubic meters in 2016 and is expected to reach 10 billion cubic meters in 2017, ranking third globally, trailing only the United States and Canada. China's Fuling shale gas field in Chongqing has accumulated proven geological reserves of 600.8 billion cubic meters, making it the largest shale gas field outside North America.
Zhang Yousheng introduced that China is deeply exploring new mechanisms for shale gas exploration and exploitation, as well as new models for cooperative development. This year, the Ministry of Land and Resources commissioned the Guizhou Provincial Government to organize the auction and transfer of the Zheng'an block, where the An'ye No. 1 well is located, marking China's first shale gas auction. Other provinces have also screened a batch of shale gas exploration blocks for competitive bidding. According to the 13th Five-Year Plan for Shale Gas Development, China aims to achieve a shale gas output of 30 billion cubic meters by 2020, and 80 to 100 billion cubic meters by 2030. (Source: Xinhua News Agency)
