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WoodMac raises Chinese long-term gas import outlook

Gas

28 Aug 2019 08:31

Photo: Shutterstock.com

Photo: Shutterstock.com

Bonn

28 Aug 2019 08:31

(Montel) China is unlikely to develop as much unconventional gas as recently assumed, suggesting its import dependence will grow over the next 20 years despite a doubling of domestic production, Wood Mackenzie said on Wednesday.

The energy consultancy sees China producing 325bcm of gas by 2040, around 39bcm less than its previous projection last year.

That compares to projected demand in the order of 673bcm, meaning the country will need to turn to the rest of the world for more than half its gas.

“The overall reduction in China’s gas production outlook calls for greater need for imports in the long term despite a more modest demand growth rate,” said WoodMac consultant Xueke Wang.

“This should drive China's growing appetite for LNG and hence influence global gas spot prices.”

China’s gas demand would account for half of Asian consumption by 2040, said Wang. 

Beijing wants to boost domestic production to rein in imports, even as it grapples with the challenge of displacing coal in the energy mix with cleaner fuels. 

The country is on track to become the world’s third largest gas producer by 2027 but faces difficulties growing output from some unconventional sources. 

Challenging outlook
“While we are positive on conventional and tight gas output, the long-term growth of [coal bed methane] and shale production looks to be challenging,” said Wang.

Quality and commercial constraints led WoodMac to revise down its expectations for shale growth by a third to 88bcm and coal bed methane by more than 60% to 15bcm.

China displaced Japan to become the world’s largest gas importer last year. It consumed around 280bcm as imports rose 31% to around 123bcm. 

Around 60% of imports arrived via LNG.
 

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