The gas demand in China is significantly lower than predicted by the Russian government, and a supply surplus has arisen on China’s internal market, Interfax Energy reports, citing the senior managers of Chinese energy companies.
In 2020 the surplus will be around 9 billion cubic meters (bcm), predicts Sinopec, China’s second largest oil and gas corporation by extraction volume.
With the Chinese government’s goal of using gas to provide 10% of the country’s energy mix by the end of 2020 (360 bcm), the demand will be about 305.9 bcm by the end of 2019, but the gas supply will reach 315.2 bcm, of which 9.7 billion will be excess, according to an assessment by Sinopec’s trading division, Unipec, the first of the Chinese state corporations to publish a prediction for 2020.
Next year, the company expects the demand to grow to 335 bcm, but the supply – 344.6 bcm – will once again be higher.
The surplus of 9.6 bcm is double the amount that Gazprom intends to pump through the Force of Siberia pipeline in 2020 (5 bcm).
Gas transit through the $17 billion pipeline will start on December 20, and is expected to reach its designed capacity of 38 bcm per year by 2024.
The start of the Russian gas supply could affect the demand negatively, Wang Haiyang, director of the Russian division of PetroChina International, told Interfax.
“With respect to demand, China is still in a situation of uncertainty. There are many obstacles, such as infrastructure, the acceptability of prices, and replacement using alternative energy sources,” he said.
“In several regions of China, one can observe a once-off shortage in the winter period, but overall the supply is adequate, and the production of gas on the internal market will probably grow significantly over the next few years,” the senior manager added.
In 2018, China extracted 160.2 bcm of gas, enough to cover approximately 56% of its internal demand. In 2019, China’s Ministry of Natural Resources predicts that extraction will reach 174-175 bcm thanks to the development of shale deposits, of which China has the largest reserves in the world (31.6 trillion cubic meters).
By 2040, China’s gas production will have doubled, reaching 325 bcm per year, predicts Wood Mackenzie. However, the gas demand will grow even faster: by 2030, China will overtake the EU’s consumption (510 bcm), and by 2040 its gas market will be equal to half of Asia’s (673 bcm).