Page 8 - AsianOil Week 18 2021

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Despite these figures, the state major is scep- Sinopec’s Shandong-based gas subsidiary,
tical of domestic gas resources’ ability to cover Wang Jinjun, said.
the country’s ever-growing demand for the fuel.
What next
Strong demand The central government has set a goal of lifting
Caixin quoted an official in the sales man- gas’ share of the total primary energy mix from
agement department of Sinopec’s gas unit, Xi around 8% in 2019 to 15% by 2030.
Haihong, as saying that an upstream produc- To achieve this the government needs to
tion squeeze was making the company more ensure not only that consumption will rise to a
reliant on imports. Sinopec said last week that suitable level but also that there is enough gas in
it planned to import 17.4mn tonnes of LNG the country’s pipelines to meet demand.
in 2021. The National Energy Administration (NEA)
“In terms of further development, resources has set a 2021 gas production target of 202.5
are still our shortcoming,” Xi said, pointing to bcm, a 5.2% increase y/y. This forecast, coupled
relatively limited domestic gas reserves and low with Sinopec’s prediction that demand will grow
growth rates as areas of concern. to 350-360 bcm this year, suggests that imports
The company expects national gas demand to will have to increase by 7.2-17.2 bcm – or 5.1-
increase by 9-12% y/y in 2021 to 350-360 bcm, 12.3% – to cover the shortfall this year.
industry news outlet Argus quoted unnamed Higher consumption figures are good news
officials from the company’s gas sales unit as for private midstream operators such as China
saying this week. They said on May 3 that gas- Gas Holdings, which announced plans last
fired thermal power plants (TPPs) and industrial month for the sale of HKD11.66bn ($1.5bn)
consumers were anticipated to drive demand worth of new shares to raise capital for gas
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.™

P8 www. NEWSBASE .com Week 18 06•May•2021