Page 12 - RusRPTAug20

2.4 ​ ​China’s gas consumption set to double by 2035.
China’s gas consumption set to double by 2035.​ China’s gas demand grew 10% y/y to 304bcm in 2019, supported by environmental policies and strong demand from the industrial sector. Although the COVID-19 pandemic and subsequent restrictions negatively affected the economy, gas consumption still rose 4% y/y in January-May.
Over the long term, demand is set to add some 100bcm every five years, doubling by 2035, with transportation (i.e. the use of gas in heavy-duty trucks) being the fastest growing sector, at a CAGR of more than 10%, according to the industry experts.
Despite domestic gas production likely also increasing considerably, from 181bcm to 300bcm by 2035, the implied gas imports will need to increase 140bcm over that period to 310bcm to match the projected demand. Out of that number, China has long-term contracts for around 150bcm of gas, implying that there is 160bcm of unallocated long-term gas demand.
Gazprom is keen to expand more into the Chinese gas market. Gazprom started gas exports through Power of Siberia (PoS) in December, and has supplied around 1.3bcm to China since then (4-5bcm is to be delivered this year). The company highlighted the cost-competitiveness of PoS supplies compared with the legacy Central Asia pipelines and oil-linked LNG contracts in all three target regions in China (NorthEast, North (Beijing) and East (Shanghai)).
Moreover, Gazprom is currently considering and discussing four potential ways to expand deliveries to China. i) An additional 6bcm via Power of Siberia, to 44bcm/year. ii) From the Russian Far East via the existing pipeline. iii) Via the pipeline through Mongolia. iv) The Western route.
However, the company has not disclosed how far the negotiations have advanced.
12​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com