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The Chinese government has warned state energy companies CNPC, CNOOC, and Sinopec to be careful with price-setting for gas ahead of the winter season when demand rises substantially, Reuters reports.
The government has already set a ceiling for prices and the new warning sought to make sure gas suppliers will adhere to this ceiling.
In the past 10 years, China’s natural gas consumption has risen fourfold to more than 25 billion cu ft daily. 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. Now, companies are turning depleted gas fields into storage facilities as part of efforts to avoid a repeat of last winter’s gas shortage, caused by failure to get a distribution network completed and operational when demand hit a peak in heating season.
Despite this major growth in gas consumption, the fuel still accounts for just 7 percent of China’s total energy mix, according to Forbes’ Jude Clemente. Clemente notes this compares with almost a third in developed economies. So it’s hardly a surprise that China’s domestic gas production has been growing steadily: over the last decade its annual growth rate has been 9 percent, Clemente notes, which is more than double the United States’ 4-percent annual growth in production.
In September, China’s natural gas production hit 12.2 billion cubic meters, up by 8.5 percent on the year, government statistics showed. Over the first nine months of the year, domestic production came in at 116.2 billion cubic meters, by 6.2 percent on the year.
Imports also grew ahead of peak demand season, reaching 7.62 million tons in September, up by a hefty 28.3 percent on the year, Xinhua reported. The nine-month export figure came in at 64.78 million tons, up 34 percent on the year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.