Surplus and Deficit in the Golden Age of Gas (part 3—China)

At the time being, China is heavily dependent on coal, with only 4% of energy consumption coming from natural gas.   However, there are two factors that are boosting the demand for LNG in China:

1)  the rapid demand for petroleum products in general for consumption by industry and consumers (i.e., rising ownership of automobiles), and

2)  environmental concerns, due to the fact that gas is relatively cleaner-burning than coal

The spectacular growth in consumption (from 87 Bcm in 2009 to 200 Bcm in 2013) will mean a sharp increase in imports (125 Bcm in 2020 to 212 Bcm by 2035).   For this reason, China is taking the following steps:

1)  currently securing supplies of gas from Central Asia (from Turkmenistan), Myanmar, and Russia,

2)  increasing LNG regasification terminals from 4 currently operating to 10

3)  exploring supply options from Asia-Pacific, and East Africa

Although China is still developing unconventional sources for gas (60-100 Bcm in shale gas by 2020), and has coal bed methane, China’s insatiable demand will end up shifting the demand in the global gas market from the OECD countries to Asia.




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