China’s natural gas consumption is projected to increase by 6.5% to 7.7% this year, potentially reaching 425 billion cubic meters, according to data from the National Energy Administration reported by Xinhua. This growth follows last year’s consumption of 394.5 billion cubic meters, which was 7.6% higher than in 2022.
The rise in consumption is driven by both an increase in domestic production and higher imports, spurred by declining gas prices.
Domestic production of natural gas in China is expected to supply around half of the total consumption, with a forecasted output of 246 billion cubic meters for the year, up by 10 billion cubic meters from 2023. Last year, domestic production hit a record of 230 billion cubic meters, a milestone that is anticipated to be surpassed this year.
In the first half of the year, production rose by 6%, reaching 123.6 billion cubic meters from January to June, with a notable 9.6% year-on-year increase in June alone.
China’s Natural Gas Consumption to Increase by Up to 7.7% This Year, Driven by Domestic Production and Higher Imports
In addition to boosting domestic production, China has increased its natural gas imports to meet rising demand. In the first half of the year, imports grew by 14.3%, totaling 64.65 million tons. This increase was partly due to lower gas prices, which made imports more economically viable.
The average price of LNG in the first quarter of 2024 was just over $9 per million British thermal units, significantly lower than the $18 per MMBtu average in the first quarter of the previous year.
China’s strategy to reduce its dependency on imported energy commodities includes significant efforts to ramp up domestic production. Recently, the government established a new umbrella company incorporating major state-owned enterprises like CNPC and Sinopec, along with companies from various other industries.
This new entity aims to bolster the country’s energy self-sufficiency by leveraging the combined expertise and resources of these diverse organizations.
The new umbrella company includes oil giants CNPC and Sinopec, alongside China Aerospace Science and Industry Corp, steelmaker Baowu, equipment manufacturer Sinomach, and power generator maker Dongfang Electric Group. This collaboration underscores China’s commitment to enhancing its energy security by increasing domestic production capabilities and reducing its reliance on foreign energy sources.
