Page 13 - AsianOil Annual Review 2021

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Despite these figures, the state major is Sinopec’s Shandong-based gas subsidiary,
sceptical of domestic gas resources’ ability to Wang Jinjun, said.
cover the country’s ever-growing demand for
the fuel. What next
The central government has set a goal of lifting
Strong demand gas’ share of the total primary energy mix from
Caixin quoted an official in the sales man- around 8% in 2019 to 15% by 2030.
agement department of Sinopec’s gas unit, Xi To achieve this the government needs to
Haihong, as saying that an upstream produc- ensure not only that consumption will rise to a
tion squeeze was making the company more suitable level but also that there is enough gas in
reliant on imports. Sinopec said in May that the country’s pipelines to meet demand.
it planned to import 17.4mn tonnes of LNG The National Energy Administration (NEA)
in 2021. has set a 2021 gas production target of 202.5
“In terms of further development, resources bcm, a 5.2% increase y/y. This forecast, coupled
are still our shortcoming,” Xi said, pointing to with Sinopec’s prediction that demand will grow
relatively limited domestic gas reserves and low to 350-360 bcm this year, suggests that imports
growth rates as areas of concern. will have to increase by 7.2-17.2 bcm – or 5.1-
The company expects national gas demand to 12.3% – to cover the shortfall this year.
increase by 9-12% y/y in 2021 to 350-360 bcm, Higher consumption figures are good news
industry news outlet Argus quoted unnamed for private midstream operators such as China
officials from the company’s gas sales unit as say- Gas Holdings, which announced plans last
ing. They said on May 3 that gas-fired thermal month for the sale of HKD11.66bn ($1.5bn)
power plants (TPPs) and industrial consumers worth of new shares to raise capital for gas
were anticipated to drive demand this year. projects.
China’s gas consumption climbed by 7.2% Not only does the private piped gas player
y/y in 2020 to 326.2 bcm, according to National plan to expand and develop liquid petroleum gas
Bureau of Statistics (NBS) data. Domestic gas (LPG) and distribution heating businesses; it has
production, meanwhile, increased by 9.8% to also said it wants to acquire city gas projects.
192.5 bcm last year, while imports of piped gas For the country’s state operators, however,
and LNG expanded by 5.3% to 101.66mn tonnes limited midstream access means that their future
(140.3 bcm). lies in building LNG import capacity. Upstream
Another company official told Caixin that production has for many years struggled to keep
the spin-off of Sinopec’s midstream assets to pace with demand and Sinopec has said that this
PipeChina, in return for CNY52.7bn ($8.15bn) trend is unlikely to change any time soon.
and a 14% stake in the pipeline operator, had Given the fundamental and ongoing altera-
forced the company to lean into LNG terminal tions to China’s energy landscape, as the country
investment. strives to pivot away from coal and oil, invest-
“The challenges for us have become ing in new LNG projects appears to be the state
bigger and bigger,” the general manager of majors’ only sensible gas strategy.™

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