Natural gas demand to see huge growth this year

China's natural gas consumption will increase this year on the back of continued policy backing from Beijing, as part of a broader clean-energy drive to replace coal with natural gas and other efforts to reduce chronic air pollution.

The liquefied natural gas market in the country has witnessed a rapid growth so far this year, with the January-September period seeing a total consumption of 167.6 billion cubic meters, a 16.6 percent year-on-year growth, higher than last year's 7 percent, according to CNPC Research Institute of Economics and Technology.

The quiet period between summer and winter months has also seen a pick up in the Chinese natural gas market, while the peak season witnessed a more drastic growth, said Duan Zhaofang, chief engineer of the natural gas market research department of the institute.

Platts Analytics forecasts that China will surpass South Korea to become the world's second largest LNG importer next year. While South Korean LNG demand is expected to remain under 40 million metric tons in 2018, Chinese LNG imports will continue to grow, reaching nearly 50 million tons in 2018, it said.

According to Marc Howson, director of LNG Market Development from S&P Global Platts, Chinese LNG imports are up nearly 50 percent year-on-year to-date in 2017, driven by the government's efforts for cleaner burning fuel.

This has been facilitated by growing contracted LNG supplies into China, particularly from both western and eastern Australia as well as the US Gulf Coast, he said.

Li Li, an energy research director at ICIS China, said China has set a high target for the proportion of natural gas in the country's energy mix by 2020. China needs to speed up natural gas supply from home and abroad to meet the demand.

According to the National Development and Reform Commission, China's natural gas supplies will exceed 360 billion cu m by 2020, and will account for 10 percent of China's energy production by then compared with the current 7 percent.

Output of natural gas rose from 50 billion cu m in 2005 to 135 billion cu m in 2016.

While currently some 39 percent of natural gas consumed in China is imported from abroad, Chinese oil giants are also stepping up imports from overseas to ensure energy supply and security.

Qu Guangxue, a spokesman for China National Petroleum Corp, the country's largest oil and gas supplier and producer, said the company will step up natural gas imports and further negotiate with other Central Asian nations for additional stocks.

The China-Central Asia natural gas pipeline will transport 200 billion cu m of natural gas by November, equivalent to the total annual natural gas consumption of China or 11 years' of natural gas supply for Beijing.

Meanwhile, China is also stepping up building terminals and infrastructure to help meet the upsurge in demand, with its oil and gas pipeline network expected to reach 240,000 kilometers by 2025 from the current 112,000 kilometers.

This means that the country will need to build an additional 128,000 kilometers of pipeline in the next few years, according to the National Development and Reform Commission.