Natural Gas Expected to Take Greater Share in China's Energy Mix as Gap Widens

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Researched by Industrial Info Resources (Sugar Land, Texas)--Natural gas will take a larger share in China's energy mix in 2010, up to 5.3%, and the gap between supply and demand will widen, experts said in November at a meeting in Beijing. Yang Zhiyi, Assistant Engineer in Chief of China Petroleum and Chemical Corporation (Sinopec) (Beijing), said that China's natural gas consumption has been growing by 10% in recent years and that the share will be 5.3% in 2010, up from the current 3.5%. The "Asia Gas Congress" meeting was mainly sponsored by China Petroleum Enterprise Association.

Natural gas currently makes up less than 3.5% of China's energy consumption, while the world's average is about 25%. As demand for clean energy grows, China will consume 140 billion cubic meters of natural gas in 2010, making it 5.3% of the energy mix, Yang said. However, China's natural gas companies will not be able to meet the need by themselves, though they are expected to be able to produce 90 billion cubic meters per year by then. China is expected to import 20 billion cubic meters of natural gas in 2010 and 50 billion to 100 billion tons in 2020.

After a series of liquefied natural gas (LNG) stations finish construction in 2010, China will import 10 million tons of LNG every year. In 2006, China imported 680,000 tons of LNG. China's first LNG station was put into operation in 2006.

PetroChina (NYSE:PTR) (Beijing) signed agreements in September 2007 to annually import 3 million tons of LNG from Australia, as confirmed by Royal Dutch Shell (NYSE:RDS.A). Shell will provide 1 million tons of LNG from its Gorgon project in Australia to PetroChina. China signed the agreements at an international price, showing China's willingness to buy at a higher price, said Tang Yali, Deputy Manager of PetroChina's natural gas and pipeline division.

The fields in which natural gas has a large development potential are those for cooking and for electricity. China's eastern provinces and cities, including Shandong, Guangdong and Jiangsu and Shanghai, are in urgent need of natural gas and can buy it with a higher price, Tang said.

Sinopec is also building several LNG stations, although the one in Qingdao has encountered problems in terms of supplier and was moved to another location in Shandong Province.

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