Last December, LNG imports into China hit a record high amid natural gas shortages due to the government moving too fast with its shift from coal to gas as well as gas transport infrastructure construction falling behind. But this year things will be different, according to the head of Sinopec’s trading division, Unipec.
Speaking at the LNG Forum in Singapore, Chen Bo said, as quoted by Reuters, “We didn’t have the experience before to deal with such a situation.” But this year, he added, “demand will increase but the government and companies will control.”
Last year, China became the world’s second-largest LNG importer, taking in some 38 million tons of the fuel, a 46-percent increase on 2016. Even so, some parts of the country suffered shortages because the gas could not reach them fast enough. As a result, China is now actively working on expanding its LNG storage capacity and pipeline network.
Earlier this month Sinopec said it had plans to boost its LNG import capacity to 26 million tons annually over the next six years from the current 9 million tons. China’s total of LNG import capacity is 17 million tons. State energy companies have also begun turning depleted gas fields into gas storage facilities to avoid a repeat of this winter’s supply crunch.
Plans are to have all 25 underground gas storage sites before winter, and to increase LNG imports: according to Wood Mac, China’s LNG imports are set for a 25-percent increase this year, to 48-49 million tons. Related: OPEC’s Biggest Problem
Fresh customs figures for March, meanwhile, revealed a 64.2-percent increase in LNG shipments to 3.25 million tons, Xinhua reported. Over the first quarter of the year, China imported 12.38 million tons of LNG, up 59.1 percent on Q1 2017.
Chances are that imports will continue to increase: the available storage capacity is only enough to cover 5 percent of the country’s gas consumption. That’s twice as low as the international average, which stands at 10-12 percent, but Beijing has launched a storage-building strategy that will see the current capacity doubled over the next five to eight years.
By Irina Slav for Oilprice.com
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