China's gas demand growth to slow to 10% this year, Sinopec official says

BEIJING (Reuters) - China’s natural gas demand is expected to reach 307 billion cubic meters (bcm) this year, an increase of just 10% from 2018, an official of state-run Sinopec Gas Co said on Tuesday, as a slowing economy hits consumption.

China is the world’s second largest importer of liquefied natural gas after Japan, producing 160.2 bcm of gas last year and importing 124.8 bcm, of which 74.3 bcm was LNG, with pipeline gas making up the rest.

Any demand increase is expected to boost its imports of the super-chilled fuel.

“Due to the macroeconomic situation and the government’s easing push to the coal-to-gas program, China’s gas consumption growth is slowing,” said the official, reading prepared remarks on behalf of Wu Gangqiang, the firm’s deputy chief economist.

“We expect the consumption growth for this year is around 10%,” he added. That figure compares with annual growth of 17% in 2018.

In its steady push to clear smoke-blanketed skies, China is forcing homes and industrial plants to cut use of coal, which fuels emissions of toxic sulfur dioxide and greenhouse gases, in favor of cleaner energy, such as renewables and natural gas.

China’s gas demand is expected to reach 510 bcm by 2030, led by city gas, industrial and gas-powered utilities, while demand from chemical plants is expected to decline, added the official.

City gas demand of 92.5 bcm in 2018 accounted for 33% of total demand, but there is another 10 to 15 years of rapid growth in demand ahead, as the trend of urbanization gathers pace, he said.

China’s industrial gas demand was 110.6 bcm, or nearly 40% of overall demand, he added. As China adopts stringent environmental measures, the company expects demand for industrial gas to become a vital driver of growth, he said.

Gas demand by utilities was 48.4 bcm, or about 17% of overall demand in 2018, with gas power capacity at 85.87 gigawatts (GW).

Still, high costs and decreasing subsidies from the government will limit demand from gas-powered utilities for electricity generation, he added.

China’s domestic production of natural gas is expected to reach 174 bcm to 175 bcm this year, with shale gas making up about 15 bcm, a research official from the Ministry of Natural Resources said.Shale gas output is expected to increase further over the next five or six years, said Pan Jiping, director of the strategic research center for oil and gas resources at the ministry.

China has been encouraging use of natural gas, as it is more efficient and cleaner than coal, which constitutes the bulk of its primary energy use, and aims to add another 4.93 million households to its coal-to-gas or electricity plan this winter.

Reporting by Muyu Xu and Shivani Singh; Writing by Jessica Jaganathan; Editing by Christian Schmollinger and Clarence Fernandez