Chinese Policy Means More LNG
A continued government push to improve air quality in China is likely to keep the country's LNG demand growth strong, according to Liu Xiaoli, co-director of the Europe-China Clean Energy Centre, speaking at the LNGgc conference in London October 10.
Liu forecast Chinese gas demand would rise from 280.3bn m3 in 2018 to between 442-460bn m3 by 2025, at which point it will make up 10-11% of China's energy mix. LNG imports are expected to rise to 80-90mn mt/yr (109-122bn m3) by 2025.
The Europe-China Clean Energy Centre is part of China's Energy Research Institute, which falls under the remit of the National Development and Reform Commission.
Natural gas use in China has risen from just under 4% of the energy mix in 2008 to 7.8% in 2018. The large jump in consumption in 2017/18 reflected nearly 7mn households being switched from coal to gas heating. A further 3mn conversions are planned by 2021, according to Liu, who added that last year 60% of air quality tests at prefecture level failed to meet government standards.
Liu said a large number of small to medium-sized industrial boilers and kilns will also be converted from coal to gas to meet air pollution standards, particularly in the Beijing-Tianjin-Hebei and the Yangtse river basin areas. In north and east China, as well as coastal areas, new boilers and furnaces will either be natural gas fired or powered by electricity, Liu said.
LNG for transport is also expected to be a significant component of demand growth. Liu said China currently has 326,000 heavy-duty trucks running on LNG and 4,100 LNG filling stations. She said that between January-July this year, 62,000 heavy-duty LNG trucks were sold, a 160% increase on the same period last year.
In addition, the conversion of inland waterway vessels from bunker fuel to LNG will add to gas demand, reflecting the tightening of emissions standards for such vessels. Liu said gas demand for transport would rise to 27bn m3 in 2020 and to 31bn m3 in 2025.
Lui said that the Chinese gas system continues to expand, increasing its ability to absorb imported gas as demand outstrips expected increases in domestic gas production. China now has 76,000 km of gas trunk line, capable of transporting 320bn m3/yr. Buy Lui put gas storage capacity at 13bn m3 in 2018, with effective working volume of 8.7bn m³. This is a tiny ratio for a market of that size.