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China Turns Gas Fields Into Storage

Gas storage

China has begun turning depleted gas fields into gas storage facilities to avoid a repeat of this winter’s supply crunch when the cold hit and several million households were left without heating.

The crunch was a result of China’s aggressive shift to gas from coal, underestimating its storage and import capacity. As a result, it is now playing it safe, pumping natural gas from Turkmenistan and Myanmar into underground caverns in former gas fields.

In this case, the depletion of its fields is a favorable circumstance: underground gas storage facilities are not an abundant resource anywhere. Some of the fields to be used as storage facilities are even still producing, Reuters’ Chen Aizhu notes.

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.

The increase in imports is vital, as 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.

Related: Oil Prices Likely To Soar On Geopolitical Risk

China is also boosting its LNG import capacity. Earlier this month, state-owned Sinopec Group said that it aims to more than double its receiving capacity for LNG over the next six years. The company will add new LNG receiving facilities along China’s east coast for a total of 26 million tonnes annually by 2023, up from the current 9 million tonnes. At the moment, China has 17 LNG import receiving terminals.

In the past 10 years China’s natural gas consumption has risen fourfold to more than 25 billion cu ft daily. This fast growth is only set to accelerate as the authorities strive to reduce the immense pollution levels in the country.

By Irina Slav for Oilprice.com

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