Key Role in Energy Structure Adjustment
The relatively clean nature of natural gas has indeed accelerated its penetration into various fields, including daily life and corporate operations, with continuous growth in market demand. The National Energy Administration has published articles indicating that under the tightening constraints of resources and the environment, the green transformation of energy is increasingly urgent, necessitating a significant increase in the proportion of natural gas. This June, the National Development and Reform Commission and the National Energy Administration, along with 13 other ministries, jointly issued "Opinions on Accelerating the Utilization of Natural Gas," which clearly outlines the gradual development of natural gas into one of the main clean energy sources in China's modern clean consumption energy system. According to statistics from the National Development and Reform Commission, from January to October this year, China's natural gas production reached 121.2 billion cubic meters, a year-on-year increase of 11.2%; imports of natural gas were 72.2 billion cubic meters, a growth of 27.5%; and consumption of natural gas was 186.5 billion cubic meters, a growth of 18.7%.
High Peak introduces that with the continuous increase in China's natural gas consumption level, imported natural gas has become one of the important sources of China's natural gas supply. According to customs statistics, from January to October this year, China's natural gas imports reached 54.165 million tons, a year-on-year increase of 24.9%. Among them, gaseous natural gas was 25.073 million tons, up 5.9% year-on-year; liquefied natural gas was 29.092 million tons, setting a new historical high, with a year-on-year increase of 47.7%.
The increase in natural gas consumption also reflects the adjustment of energy structures in various regions. Taking Beijing as an example, according to the Beijing Statistical Yearbook, between 2010 and 2016, Beijing's total energy consumption rose from 63.59 million tons of standard coal to 69.61 million tons of standard coal. The share of coal consumption dropped from 29.6% to 9.8%, a decrease of over 60%. Meanwhile, the share of natural gas consumption surged from 14.6% to 31.7%, an increase of around 50%.
Gas Storage Capacity and 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 frankly stated.
In August, the National Energy Administration's Oil and Gas Department, among other departments, released the "2017 China Natural Gas Development Report," stating that compared to developed countries in Europe and America, China still lags significantly in the construction of natural gas pipelines and underground gas storage facilities. As of the end of last year, the pipeline mileage per 10,000 square kilometers of land area in China was approximately 70 kilometers, only 12% of the United States. The working gas volume of underground gas storage facilities was 6.4 billion cubic meters, accounting for only 3.1% of consumption, far below the global average of 10%. Han Xiaoping, the Chief Information Officer of China Energy Network, further explained that in Europe, the storage level as a percentage of consumption has reached 15%, while in the United States and Russia, the two major natural gas-producing countries, 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 also publicly stated earlier that China's storage facilities have shown a slow construction pace and insufficient peak-shaving capacity, urgently needing to encourage investment in building storage facilities to enhance the guarantee of natural gas supply.
Han Xiaoping stated that the production cost of natural gas is higher than that of coal, and the level of pipeline construction for natural gas 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 benefits of natural gas companies with subsidies, are among the reform challenges faced by various regions.
