China strengthens logistics, storage capabilities for thermal coal, LNG

Singapore — China is enhancing its logistics and storage capabilities for thermal coal and LNG in a bid to maintain stable supply of generating fuel, China's National Energy Administration and National Development and Reform Commission said in an official statement published June 18.

China plans to add a total of 30 million mt in coal storage facilities across power plants in 2020 in order to ensure normal coal stock levels are maintained at above 15 days' supply for coal-driven power plants in the main coal-consuming regions, the statement said.

"Coal companies are encouraged to collaborate and build storage at transportation centers [in] coal consuming regions in order to improve the flexibility in coal supply," it added.

Chinese railway transportation capabilities for coal will be boosted by more than 40 million mt in Shaanxi province and more than 20 million mt at Xinjiang in northwest China in 2020 in order to fulfill Chinese coal demand, it added.

In the statement, China urged utilities to improve energy-generating efficiency and eliminate inefficient facilities and coal mine sites.

"China has been eliminating its less efficient mines and consolidating its supply. Hence in the long run, China will improve coal supply domestically," a Singapore-based trader said.

The new measures, along with other recent strategies, could make China less reliant on seaborne coal imports, market sources said June 18.

China has pushed forward the construction of oil and gas pipelines and gas storage facilities, according to June 18's official statement.

The move comes on the heels of China's recent natural gas liberalization reforms to speed up the construction of natural gas storage facilities.

The reforms include liberalizing operations of gas storage facilities and allowing independent storage operators to trade gas and set storage fees against market prices, according to a document jointly released by five ministry departments, including the top policy planner -- the National Development and Reform Commission -- on April 14.