Future development trends of the natural gas market

Thread Content

This post was last edited by yinkuilin6868 on 2015-11-23 at 10:39. Looking at the future development of the natural gas market, it is similar to the oil market in that it has shifted from a situation of relatively tight supply and demand to one that is relatively more relaxed. This is mainly due to the increase in domestic natural gas production, as well as the significant rise in imports of both pipeline gas and liquefied natural gas in recent years. It is estimated that China’s natural gas consumption will grow by 4% in 2015; although the growth rate has slowed down, it still remains at a relatively moderate level. Looking ahead, we believe there are still many uncertainties regarding the future growth in natural gas demand, primarily due to the current market conditions. Looking at the average annual growth rate of natural gas over the past 5 years, China’s natural gas demand is expected to reach 300 billion cubic meters by 2020. There is still a gap of 600 billion cubic meters compared to the **planned figure of 3600 billion cubic meters. Why is there this gap? There are mainly two reasons for this. The first reason is the changes in the market environment; at present, our natural gas sales outlets lack the necessary capacity to sell gas. Additionally, there are issues with our pricing mechanism. Moreover, our planned projects have not been implemented properly. When we made plans back in 2020, we set a target of 360 billion cubic meters of natural gas to be consumed by that year. However, if we continue with the previous annual consumption rate of 14 billion cubic meters, we won’t even reach 30 billion cubic meters by 2020. If we assume an annual increase of 20 billion cubic meters, the total would still only be 300 billion cubic meters by 2020. It’s therefore very difficult to achieve the set targets. If we want natural gas to develop rapidly in the future, significant changes are needed in terms of policy support, including adjustments to pricing policies as well as changes in the policies related to the use of natural gas. We believe that there is still significant potential for the growth of natural gas demand in the future. First, looking at per capita consumption, both our per capita natural gas consumption and the share of natural gas in our total energy consumption are much lower than the world average. Currently, the per capita consumption is only 123 cubic meters per person, while the world average is 47 billion cubic meters; thus, our per capita natural gas consumption is only one-fourth of the world average. In terms of the proportion of natural gas in total primary energy consumption, it is also only one-fourth. From this perspective, we think there is great potential for the development of natural gas in the future. Using medium- to long-term natural gas forecasting models, an assessment was made of future natural gas demand under three scenarios: the baseline scenario suggests 300 billion cubic meters by 2020, the low-scenario scenario indicates 270 billion cubic meters, and the high-scenario scenario predicts 330 billion cubic meters. Even by taking into account the high-scenario scenarios, it is difficult to reach the **planned level of 360 billion cubic meters; there is still a gap of 30 billion cubic meters. In terms of production, the growth rate of natural gas production over the past few years has been lower than demand; on average, the annual increase in natural gas production has been only around 7.35 billion cubic meters. This situation will lead to a significant increase in our imports in the future. There is a possibility that there will be a surge in pipeline gas supply in the coming years, with a large amount of foreign natural gas flowing into China’s market. As a result, the natural gas market could face a surplus, just like the oil market. If we take into account the development of unconventional natural gas sources, the amount of surplus supply could exceed 100 billion cubic meters. It is necessary to handle well the relationship between low-carbon development and natural gas development. Nowadays, people talk about the need to move from a high-carbon to a low-carbon and eventually to a carbon-free development model, **and they also mention that natural gas will play an important role in the future. At present, the development of natural gas is influenced to a large extent by policies, including our pricing policies as well as those related to its utilization. It is also affected by competition among fossil fuels. Therefore, if we want natural gas to achieve significant development as a clean energy source in the future, it is necessary to find a good balance between fossil fuels such as coal, oil, and natural gas, as well as between traditional fossil fuels and non-fossil fuels. We also need to strike a proper balance between low-carbon development and energy development; only then can we achieve green and sustainable development in the field of oil and natural gas. (Article source: Hexun.net)