Natural Gas in China
Market evolution and strategy
In 2007, China`s natural gas consumption increased by 23.8% and attained 69.5 billion cubic metres (bcm) (NBS 2008). Thanks to this rapid increase, China became one of the world’s top 10 countries in terms of natural gas consumption. Moreover, according to the IEA’s World Energy Outlook 2008, China will become the top natural gas consuming country in the Asia-Pacific region, overtaking Japan by 2015. Until the start of liquefied natural gas (LNG) imports in 2006, China was self-sufficient in terms of natural gas. Although China has accelerated the domestic production of natural gas, which increased by 18.3% and attained 69.2 bcm in 2007, its import dependence is expected to increase rapidly due to rising gas demand.
The penetration of city gas, together with the urbanisation of cities, the expansion of industrial use (including the petrochemicals industry and the power sector) have been the driving force behind this high-paced increase in demand. The government has enhanced natural gas use through policy and regulation, and by developing infrastructure.
Despite the rapid increase in consumption, the share of natural gas in China’s energy mix is still relatively low at 3.5%, while coal’s share accounts for 69.5%. Natural gas consumption per capita amounted to only 53 cubic metres (m3) in 2007 while the world`s average was about 460 m3. In order to promote the use of this “cleaner energy” as a substitute fuel for oil and coal, the government targeted to increase the share of natural gas in China`s total primary energy consumption (TPEC) up to 10% by 2020, and has been leading the development of the natural gas market in the country.
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The views expressed in this Working Paper are those of the author and do not necessarily represent the views or policy of the IEA or of its individual member countries.