Gas Storage Capacity & System Reform
"Addressing the supply gap at its root, successfully achieving the natural gas supply targets as planned, still requires accelerating the reform of the oil and gas system and improving the market mechanism design for aspects like gas storage." An industry expert openly stated.
In August, the National Energy Administration's Petroleum and Natural Gas Department, among other departments, released the "2017 China Natural Gas Development Report," stating that compared to developed countries in Europe and the United States, China still lags significantly in the construction of natural gas pipelines and underground gas storage facilities. As of the end of last year, the length of pipeline per 10,000 square kilometers of land area in China was approximately 70 kilometers, only 12% of the United States, and the underground gas storage facilities had a working gas capacity of 6.4 billion cubic meters, accounting for only 3.1% of consumption, far below the global average of 10%. Han Xiaoping, Chief Information Officer of the China Energy Network, further explained that the current storage level in Europe accounts for 15% of consumption levels, while in the United States and Russia, the two major natural gas producers, the storage volumes have reached 120 billion and over 70 billion cubic meters respectively, accounting for 15.4% and 18.8% of consumption. The National Development and Reform Commission had also publicly stated that China's storage facilities have shown a slow construction pace and insufficient peak-shaving capacity, urgently needing to encourage investment in the construction of storage facilities to enhance the guarantee of natural gas supply.
Han Xiaoping stated that the production cost of natural gas is higher than coal, and the construction level of natural gas pipeline transportation needs improvement, with a higher waste rate along the route compared to coal transportation. The profitability of natural gas companies is not ideal, and whether to continue subsidizing natural gas companies, and how to balance the profits of natural gas companies with subsidies, are among the reform challenges faced by various regions.
