Growth of China's apparent consumption of natural gas, is expected to rally in 2016 thanks to natural gas price cut and environmental protection pressure. Affected by economic slowdown, mild climate, and high gas prices, China's apparent consumption of natural gas came to 191 billion cubic meters in 2015, rising only 3.7 percent on year, which recorded 10-year low, according to a report by CNPC Economic and Technology Research Institute (ETRI) released on Tuesday, Deducting the natural gas storage, the actual consumption of natural in China were 187.3 billion cubic meters in 2015, up 3.9 percent on year, yet lower than the targeted consumption of 230 billion cubic meters for 2015 put up in China's development plan for 2011-2015. Weak demand has led to excessive supply of natural gas in China, and the industry is in urgent need of policy guidance and encouragement, the report says.
Nevertheless, market believes that China's natural gas demand would resume growth in 2016 with steady increases in supply and imports, and natural gas supply would generally stay loose despite habitual tight supply. Qian Xingkun, deputy head of CNPC ETRI, forecast that China's apparent consumption of natural gas would grow 7.3 percent on year to 205 billion cubic meters in 2016, and natural gas consumption is expected to weigh 6.45 percent in China's primary energy consumption in 2016, up from the 5.9 percent in 2015. Specifically, gas consumption for residential use is estimated to rise 9.1 percent on year to 82.7 billion cubic meters in 2016, for power generation up 8.7 percent on year to 31.9 billion cubic meter, for industrial fuel up 6.1 percent on year to 61.1 billion cubic meters, and for chemical industry up 3.7 percent on year to 29.3 billion cubic meters.
But Shan Lianwen, deputy head of CNOOC Economic and Technology Institute, prudently forecast China's natural gas consumption in 2016 at 190 billion cubic meters with growth of 4.5-5 percent year-on-year. According to the report, China's natural gas supply is likely to increase 5.5 percent on year to 139 billion cubic meters (including coalbed methane) in 2016, higher than the growth of 3.5 percent in 2015. The report forecasts natural gas imports of China at 62.4 billion cubic meters in 2015 with growth narrowing down to 4.7 percent, and 69 billion cubic meters in 2016 with growth of 10.6 percent on year.
The dependency on import natural gas would rise slightly to 33.7 percent. What's worth noting is that China's LNG imports in 2015 is estimated at 19.45 million tonnes, down 2 percent on year, the first negative growth in history. Considering an expected increase of 18.4 million tonne LNG storage capacity, China's LNG imports is likely to hike 11.1 percent on year to 21.6 million tonnes, the report says. The cut in gate price of natural gas for non-residential use in November of 2015 by the National Development and Reform Commission is expected to aid domestic natural gas demand to resume fast positive growth, curb development of unconventional gases and imports of spot LNG, and alleviate the pressure of gas oversupply, noted in the report. The surplus natural gas supply, which stood at more than 10 billion cubic meters in 2015, is expected to decrease to 3 billion cubic meters in 2016 thanks to consumption increase, the report says.
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