China's total pipeline gas imports are projected to contract marginally in 2020, while its LNG imports are projected to grow by nearly 7% year over year during a wider slowdown in natural gas demand growth for the year, according to the "China Natural Gas Development Report 2020."
The country's pipeline gas imports should be about 50 billion cubic meters in 2020, slightly down from 50.8 Bcm in 2019, the Sept. 18 report said. LNG imports are expected to rise to 90 Bcm, from 84.4 Bcm a year ago. The total natural gas imports of 140 Bcm in 2020 would be a 3.6% growth over 2019, lower than the 6.9% year-over-year growth seen a year ago.
China's natural gas demand growth is expected to decelerate to 4.4% in 2020 from 8.6% in 2019 due to the impact of COVID-19, with demand growth in the first half of 2020 coming in at 1.5% and then picking up in the second half, the report said.
On the domestic supply side, China's natural gas production is expected to be 189 Bcm — excluding the gas produced from coal — in 2020, with year-over-year growth of about 9%, maintaining a relatively rapid growth overall, the report said.
Total natural gas consumption in 2020 is expected at 320 Bcm, compared with 306.4 Bcm in 2019.
The report was jointly published by the oil and gas department of China's National Energy Administration, or NEA, a state body that formulates the country's energy policies, and research centers under the State Council and Ministry of Natural Resources.
"China's natural gas demand from different sectors showed different trends in the first half of 2020 after being hit by the coronavirus pandemic, which will continue to be a challenge for the whole natural gas industry in the second half," Zhang Yuqing, former deputy director of the NEA, said at the report's launch.
In 2019, China's spot LNG imports rose to 21.3 million metric tonnes, accounting for 35.4% of total LNG imports with a growing number of market entities importing natural gas, according to the report. "In addition to major oil and gas enterprises, locally state-owned, private, and Hong Kong-funded enterprises imported 4.41 million mt of LNG, accounting for 7.3% of China's total LNG imports," the report said.
In 2019, natural gas accounted for 8.1% of China's primary energy consumption, an increase of 0.3 percentage points year-over-year, the report said, adding that urban and industrial gas users were the main sources of demand, accounting for 37.2% and 35.0%, respectively.
China added record levels of natural gas reserves and production in 2019, the report said. In 2019, 334.8 billion yuan was invested in exploration and development, a 25.5% increase year over year, of which 82.1 billion yuan was invested in exploration.
By the end of 2019, China had built more than 87,000 kilometers of mainline gas transmission pipes and had commissioned the northern section of the Eastern Route between China and Russia, the report said. The creation of China Oil & Gas Pipeline Network Corp. is expected to accelerate the formation of a nationwide gas network while China pushes forward with the reform of its natural gas market.
As of Sept. 17, US$1 was equivalent to 6.76 Chinese yuan.
Eric Yep is a reporter and Cindy Liang is an analyst with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.