Economic Watch: China natural gas industry reforms open up chances for both Chinese and foreign firms

Source: Xinhua| 2019-04-05 11:54:29|Editor: ZX
Video PlayerClose

SHANGHAI, April 5 (Xinhua) -- China's reforms on natural gas industry have created tremendous opportunities for both Chinese and foreign companies, according to industry experts who are attending the 19th International Conference & Exhibition on Liquefied Natural Gas (LNG) in Shanghai during this week.

"Many of the reforms in China around gas transportation, around import terminals along the coastal line and so forth, have been critical enablers in opening up Chinese market," Australian natural gas producer Woodside CEO Peter Coleman told Xinhua.

China's efforts to fight against air pollution are also a catalyst for the development of natural gas industry in the country, said Coleman.

The construction wave of LNG receiving terminals has created more opportunities for both buyers and sellers, according to Coleman, as sellers, such as Woodside, could seek more buyers, while Chinese buyers could have more options in securing their gas supply.

China's efforts to promote natural gas are on the right direction, said Christophe Malet, managing director of Hanas LNG, a subsidiary of the Chinese private energy company Hanas Group.

China is pushing forward the opening of natural gas infrastructure to private sector, which is bringing market opportunities for private companies, such as Hanas, Malet told Xinhua.

Over the past few years, Hanas has been preparing for two LNG receiving terminals in China, one of which is expected to receive regulatory approval in the near future, Malet said.

In addition, China's policies to steer the switch from coal to gas are helping the country's energy transition, Malet added.

China's natural gas consumption totaled 280.3 billion cubic meters in 2018, a robust growth of 18.1 percent from a year ago, according to data from China's National Development and Reform Commission.

Gas consumption in China is estimated to reach 326 billion cubic meters in 2020 and will reach 500 billion cubic meters in 2030, according to Chen Yu, director of the oil and gas marketing and trading office at the Sinopec Group.

According to the three-year action plan on air pollution control released in 2018, China will boost the share of natural gas in its total primary energy consumption to 10 percent by 2020 from current less than 8 percent.

"New consumption is driven by the policy of coal-to-gas conversion efforts, which mainly focuses on city gas, power generation and heating supply," said Chen. At present, China's urban and rural residential gas coverage is far less than 50 percent.

The rising demand from China is also reshaping the global LNG market. As China's LNG imports are growing at a steady pace, the country is expected to have more pricing power in the regional market, said Zhang Yadong, chief risk officer at ENN Group, a Chinese private energy company.

As the world's second largest LNG importer, China imported a total of 53.78 million tonnes of LNG in 2018, a sharp increase of 41 percent from a year ago. Industry observers widely expected that China will soon be the world's largest LNG importer.

The LNG conference, first held in 1968, is a triennial event for the industry. This year marks the first time that the conference was held in China, the world's fastest growing LNG market.