Overview

Production and consumption of gas in China has expanded rapidly over the past decade. Consumption has outstripped productio, making China a net-import of gas in 2006. The International Energy Agency has forecast Chinese domestic gas demand will increase nearly five-fold from 110 billion cubic metres a year in 2010 to more than 500 bcm a year in 2035. The energy consultancy Wood Mackenzie estimates that China’s gas demand will rise to more than 600 bcm/y by 2030.

Despite significant growth, domestic gas production has not kept pace with demand. Conventional reserves are estimated at 3.3 trillion cubic metres, according to the BP Statistical Review of World Energy 2014. This is 1.8% of world resources and a reserves to production ratio of just 28 years. However, China is hoping to develop its vast unconventional resources including coalbed methane, which are the third-largest in the world behind Russia and Canada, at 36.8 trillion cubic metres, and shale gas resources are estimated at 25.1 trillion cubic by the Ministry of Land and Resourcess.

With little gas-to-power capacity, gas accounted for just 4% of China’s energy mix in 2010, according to energy regulator the National Energy Administration (NEA). The NEA plans to more than double the share of gas in the energy mix to 10% by the end of 2020 through boosting domestic production of unconventional sources (CBM and shale gas), as well as increasing imports.

Rapid consumption growth has prompted China’s energy majors to expand the country’s import infrastructure, building several LNG terminals along the country’s eastern seaboard and cross-border pipelines into Central Asia and Myanmar.

Only 10% of residential households have access to gas and National policies in China are increasingly supportive of an expanded role for gas in the country, as a means of diversifying the energy mix and reducing pollution. However, sluggish reform in the power sector has discouraged coal-to-gas switching, leaving the country dependent on coal-fired power stations for the majority of its electricity.

Profile first uploaded: 18/10/2012