BAKU, Azerbaijan, Jan.23. The outlook for gas demand remains bullish as China sets ambitious target to increase the share of gas in the total energy mix, Trend reports with reference to Fitch Solutions.
The company says in its latest report that gas plays a relatively small role in China’s energy mix accounting for 9 percent in 2021, but it is a fast-growing fuel registering double-digit growth rates for most of the years between 2009 and 2021.
“City gas and industrial sectors are key drivers behind China's downstream gas demand growth. We expect strong support to long term demand growth from city gas market as the state-owned companies are expanding the city gas networks and gas storage infrastructures to accommodate seasonal peak in gas consumption from residential and commercial sectors. Besides anticipated surge in demand from industrial sectors, the government’s ongoing policy push to switch from coal to gas in power sector could expand the share of gas in energy consumption mix,” reads the report.
In addition, Fitch Solutions’ analysts note that liberalization of the domestic gas market, accelerated by the establishment of PipeChina, and growing number of privately-owned local and foreign players could help to further deregulate natural gas prices, stimulating gas consumption growth.
“We expect gas market to expand relatively fast with total demand growing up to 512bcm by 2031 despite potential headwinds from growth of renewable energies. Obviously, more gas will be needed to support fuel switching policy. China will continue to face insufficient supply of natural gas to keep pace with demand growth, but the solution to address this will be to ramp up LNG imports as the significant upside risks to domestic gas production remains uncertain.”
China’s customs department says that the country’s LNG imports dropped by 19.5 percent in 2022 as compared to 2021 and stood at 63.44mn metric tons. China imported 6.6mn mt of LNG in December, down 13 percent year-on-year. The piped gas imports last month were 3.68mn mt, down 9.7 percent year-on-year. In 2022, piped gas imports were 45.81mn mt, up 7.8 percent year-on-year.
The country’s energy imports were lower in 2022 due to high global LNG prices and COVID-related restrictions, which put downward pressure on demand.
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