State-owned PetroChina plans to increase its marketable natural gas production by 4.6% to 4,888.9 Bcf, or 138.44 Bcm, in 2023, as part of the oil and gas giant's efforts to ramp up investment and monetize reserves, the company said during its annual earnings briefing late March 30.
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The growth rate is lower than in 2022. PetroChina produced a record high 4,675.0 Bcf, or 132.38 Bcm, of marketable natural gas in 2022, up 5.8% year on year. Of its total production in 2022, 4,471.3 Bcf, or 126.61 Bcm, was produced domestically, up 5.9% year on year, while only 203.7 Bcf, or 5.77 Bcm, up 3% year on year, was from overseas assets, according to data from the company.
PetroChina defines marketable gas as the total gas produced from the reservoir after accounting for various steps in processing the gas such as field separation, removal of particulates and flaring.
PetroChina's domestic natural gas production accounted for more than 58% of China's total natural gas production of 217.8 Bcm in 2022, data from the National Bureau of Statistics showed.
"We will continue to increase efforts in exploration and development this year, especially in key areas such as the Sichuan Basin, Tarim Basin, Junggar Basin and Bohai Bay Basin," company president Huang Yongzhang said, noting strategic breakthroughs in these four regions.
"Natural gas is a green and low carbon fossil fuel, which still plays an irreplaceable role in the energy transition, and we believe that the prospect for future development of natural gas is huge," CFO Wang Hua said, adding that natural gas accounts for around 50% of the company's total hydrocarbon production.
China's domestic natural gas demand in 2023 is expected to grow about 5.5% year on year, with the removal of COVID-19 curbs and economic stimulus policies, Huang said. This growth is more optimistic than the 5.2% forecast made by CNPC's Economics & Technology Research Institute earlier in the week.
However, Huang noted that natural gas demand growth in 2023 will also be influenced by factors such as power demand, international gas prices, industrial and climate policies.
Natural gas sales
PetroChina sold a total 260.284 Bcm of natural gas in 2022, down 5.0% year on year, out of which domestic gas sales were 207.096 Bcm, an increase of 6.4% from last year, the company's data showed.
The growth in PetroChina's domestic gas sales is notable as China's total gas consumption recorded the first annual decline in 2022, down 1.7% at 366.3 Bcm, industry data showed, and despite rising costs of imported natural gas.
The company said it pulled this off by continuously optimizing the procurement of imported gas and sales structure and strategy in the domestic market.
"Apart from increasing domestic natural gas production, we also tried our best to source low-cost gas resources so as to reduce our purchasing cost for imported natural gas," Wang said, noting that PetroChina's natural gas sales business achieved an operating profit of Yuan 13 billion ($1.89 billion) in 2022, despite the sharp increase in LNG import costs.
China's natural gas importers, including PetroChina, are believed to have increased imports of pipeline gas while cutting down imports of LNG in 2022, due to lower pipeline gas prices.
China's pipeline natural gas imports in 2022 were estimated to have risen 7.8% year on year to 45.8 million mt, while its LNG imports fell 19.5% year on year to 63.44 million mt, data from the General Administration of Customs showed.
The average price of pipeline gas imported by China last year was estimated at $7.73/MMBtu excluding taxes and fees, which was only 49.6% of the average price of LNG imported by the country over the same period, S&P Global Commodity Insights calculations based on customs data showed.
Pipeline gas imports from Russia are believed to have contributed to most of the import growth in 2022, with inflows rising to 15 Bcm from 10 Bcm in 2021. The cost of pipeline gas from Russia is estimated to be the lowest among all pipeline gas sources, while China also imports natural gas from Turkmenistan, Kazakhstan and Myanmar via pipelines.