Page 7 - GLNG Week 19 2021

GLNG COMMENTARY GLNG

to climb to 38 bcm in 2022 and 40 bcm in 2023. Shandong-based gas subsidiary, Wang Jinjun,
Despite these figures, the state major is scep- said.
tical of domestic gas resources’ ability to 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 last week that the country’s pipelines to meet demand.
it planned to import 17.4mn tonnes of LNG in The National Energy Administration (NEA)
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 For the country’s
industry news outlet Argus quoted unnamed for private midstream operators such as China
officials from the company’s gas sales unit Gas Holdings, which announced plans last state operators,
as saying this week. They said on May 3 that month for the sale of HKD11.66bn ($1.5bn) however, limited
gas-fired thermal power plants (TPPs) and worth of new shares to raise capital for gas
industrial consumers were anticipated to drive projects. midstream
demand this year. Not only does the private piped gas player
China’s gas consumption climbed by 7.2% plan to expand and develop liquid petroleum access means
y/y in 2020 to 326.2 bcm, according to National gas (LPG) and distribution heating businesses; it
Bureau of Statistics (NBS) data. Domestic gas has also said it wants to acquire city gas projects. that their future
production, meanwhile, increased by 9.8% For the country’s state operators, however, lies in building
to 192.5 bcm last year, while imports of piped limited midstream access means that their
gas and LNG expanded by 5.3% to 101.66mn future lies in building LNG import capacity. LNG import
tonnes (140.3 bcm). Upstream production has for many years strug-
Another company official told Caixin that gled to keep pace with demand and Sinopec has capacity.
the spin-off of Sinopec’s midstream assets to said that this trend is unlikely to change any
PipeChina, in return for CNY52.7bn ($8.15bn) 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 bigger ing in new LNG projects appears to be the state
and bigger,” the general manager of Sinopec’s majors’ only sensible gas strategy.™

Week 19 14•May•2021 www. NEWSBASE .com P7