Energy firms at capacity to ensure 'warm' winter

China Petroleum and Chemical Corp (Sinopec), the country's biggest geothermal developer, is pumping 130 million cubic meters of natural gas a day, in an effort to meet demand during the peak winter season.

All of the company's gas fields and three liquefied natural gas terminals, including the Qingdao, Beihai and Tianjin LNG terminals, have been opened up to full capacity since Nov 15, when China switched on its residential heating system across the north of the country.

To help, Sinopec said it would also step up spot purchases to meet rising demand in the world's fastest-growing gas consumer market.

The company vows to supply 18.17 billion cubic meters of natural gas during this heating season, up 17.7 percent from 2017, with those supplied to the seven northern provinces and municipalities up 29.1 percent year-on-year, it said.

The other two oil majors in the country are also gearing up to supply sufficient gas for the winter. China National Offshore Oil Corp, China's largest producer of offshore oil and gas, said earlier it would supply 24.6 billion cubic meters of natural gas during the heating season, up 20 percent compared with the same period 2017. Some 6.1 billion cubic meters of natural gas will be supplied to the seven northern provinces and municipalities, up 63.5 percent from 2017.

Most of the natural gas the company is supplying this heating season is offshore, coalbed gas and imported liquefied natural gas (LNG), while the company has also been negotiating with LNG suppliers worldwide, it said.

China National Petroleum Corporation has also been stepping up natural gas supplies from both domestic fields and abroad to meet customer demand. It has recently made a major breakthrough in China's northwestern Tarim Basin, via a sizable discovery of gas in the Zhongqiu-1 exploration well.

While demand for natural gas will surge sharply over the cold winter and spring months, analysts believe shortages are unlikely this heating season.

Learning from past experience, China is better equipped with contingency plans, and suppliers are also better equipped with newly commissioned and expanded infrastructure and supply contracts, said Na Min, a senior analyst for oil and gas at Bloomberg New Energy Finance.

"Enlarging LNG and pipeline imports will help China replace coal's share in the primary energy mix with natural gas, and coal's share of China's energy mix will drop to less than half by 2030 because of the shift toward gas and renewables," said Wang Lu, Asia-Pacific oil and gas analyst at Bloomberg Intelligence.

"Natural gas may more than double its share to 14 percent in the energy mix by 2030 and China's gas prices will become more market-oriented, allowing supply and demand dynamics to determine prices," Wang added.