Page 7 - GLNG Week 43

GLNG COMMENTARY GLNG
fields such as Changqing, Tarim and Southwest fields.
Moreover, the new Power of Siberia pipeline, which will eventually pump 38 bcm per year of Russian gas across the border, is due to come online in December.
New supplies open the door to a ramp-up in conversion projects, and the country is already understood to be aiming to switch over another 4.93mn households this winter.
Growing appetite
Both the US Energy Information Administra- tion’s (EIA) and Sinopec have predicted a con- siderable expansion in demand figures for the next 10-30 years.
The EIA’s International Energy Outlook 2019 (IEO2019) report, published in Septem- ber, has predicted that China is anticipated to consume 21.7tn cubic feet (614.54 bcm) per year by 2050.
The EIA said Chinese gas consumption growth would be driven by the country’s electric power sector, as demand for power grows and natural gas-fired power plants are brought online to replace coal-fired units. The administration added that it expected demand from the power generation sector to reach 7.3 quadrillion British thermal units in 2050.
The transportation sector is also forecast to contribute to demand growth, as truck and rail freight transport lean more heavily on the cleaner burning fuel. Gas consumption in the transportation sector is projected to grow to nearly 6 quadrillion Btu in 2050.
Sinopec, meanwhile, expects gas demand to expand by 82% from last year’s levels to 510 bcm in 2030. The state-run major sees demand growth coming mainly from the industrial, city
gas and utility sectors, Sinopec’s Wu said last week, while consumption from the petrochemi- cal is projected to slow.
Industrial gas use amounted to 110.6 bcm in 2018, or nearly 40% of total consumption, while City gas demand reached 92.5 bcm and power sector consumption amounted to 48.4 bcm.
“Industrial gas will be the backbone support- ing the growth of natural gas consumption,” S&P Global Platts quoted an unnamed Sinopec official as saying. “We expect gas demand from China’s inland regions to grow more in the future with industrial transfer.”
“City gas still has a lot of space for develop- mentinChina,”theofficialsaid.Drivingthiswill be an anticipated rise in urbanisation and urban gasification levels from 59.7% and 50.9% at the end of 2018 to more than 70% within the next decade.
What next
China’s demand will have to pick up pace to fill the role the government has long set out for it. The advent of Power of Siberia gas flows has caused some speculation that this will dent demand for LNG imports. But this outcome may be overstated.
The country simply does not have enough gas, via pipelines or LNG terminals, to meet its consumption targets. A new pipeline from Rus- sia removes one bottleneck but will not curtail maritime shipments for long. Rather, it may lead to more competitive wholesale pricing, which would lift distributor margins and help lower costs for end-users. This should then help drive demand up.
More gas for China simply means it will be easier to ramp up consumption without homes being left in the cold.™
The EIA said
Chinese gas consumption growth would be driven by the country’s electric power sector.
The country simply does not have enough gas, via pipelines or LNG terminals, to meet its consumption targets.
Week 43 31•October•2019 w w w . N E W S B A S E . c o m
P7