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China Banks On Natural Gas As Oil Production Tanks

LNG

Imports and output of natural gas rose more than twice the expected amount this year in China

Imports and domestic output of natural gas are outpacing government projections in China as the country works toward a goal of making the fuel 10 percent of its energy consumption by 2020.

Official data for domestic production and imports shows that the total amount of natural gas available in China in the first five months of the year was approximately 72.0 million tons, up 5.9 percent for the same time frame last year.

The increases are more than double the annual rate needed in order for China to increase natural gas’ share of energy consumption from its current 5.9 percent to 10 percent by the end of the decade,

Imports and output of natural gas rose more than twice the expected amount this year in China

Imports and domestic output of natural gas are outpacing government projections in China as the country works toward a goal of making the fuel 10 percent of its energy consumption by 2020.

Official data for domestic production and imports shows that the total amount of natural gas available in China in the first five months of the year was approximately 72.0 million tons, up 5.9 percent for the same time frame last year.

The increases are more than double the annual rate needed in order for China to increase natural gas’ share of energy consumption from its current 5.9 percent to 10 percent by the end of the decade, reports Reuters.

LNG has been the main source of the increased imports, with imports of the liquefied gas up 38.4 percent in the first five months of 2017 while pipeline imports dropped 4.4 percent. LNG is becoming a more competitive option for imports as the gas becomes less costly. Customs data from May shows that the average landed cost of LNG was $7.28 per MMBtu. Related: The Downturn Is Over, But U.S. Oil Companies Face A Huge Problem

This is higher than the $5.25 per MMBtu of pipeline imports, however, the customs price excludes the cost of internal pipeline and distribution, meaning imports from Central Asia still have to pay to get from the border to demand centers. LNG, on the other hand, is consumed near where it is offloaded and re-gasified.

Strong natural gas demand abroad can help support jobs in the United States

Natural gas is becoming an increasingly popular fuel source for power generation, offering a cleaner alternative to coal-fired electricity generation. Natural gas demand is expected to grow faster than both oil and coal through 2035, according to BP’s (ticker: BP) annual outlook. The main centers of that growth will be China, the Middle East and the U.S. as all three look to significantly grow their use natural gas for power generation.

(Click to enlarge)

The increased demand in the U.S., and the increasing thirst for more natural gas abroad, could create as many as 2 million jobs in the United States by 2040, according to the American Petroleum Institute. The natural gas industry, along with related economic activity, now employs four million Americans from drilling to pipeline construction. The report, based on projections from the Energy Information Administration, also predicted an additional $1 billion in cost savings for the American consumer from lower energy prices and cheaper production of petrochemical products.

Some political obstacles remain, however, with protectionist trade talk making up a major part of President Donald Trump’s campaign. API Chief Economist Erica Bowman said the group has been talking to President Trump’s administration about the benefits of open borders for natural gas producers looking to export.

By Oil and Gas 360

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  • Dan Foster on June 30 2017 said:
    China will hit 40 percent n.g. by 2025. It's the cheapest way to convert already oil cars to n.g. based on Chinese income. Expensive and river polluting electric battery cars are just the dreams of Marvel comic readers.q
  • Bill Simpson on July 06 2017 said:
    Australia and Chevron are going to love this. Now we know why the top people in Exxon, Shell, and Total just met with the head of Qatar and urged him to increase their production of LNG by 30%.

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