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China’s winter gas demand to rise 10% on economic recovery – state oil firms

China’s natural gas demand is likely to grow about 10% this winter, up from 0.3% last winter, as a strong economic recovery from the coronavirus crisis spurs residential and industrial demand, state-run oil majors said.

With higher domestic production and record liquefied natural gas (LNG) imports, China will experience a relatively balanced market for the heating season from mid-October through mid-March when demand for the fuel typically peaks, executives from national oil companies told a gas seminar in Beijing.

However, firms remain alert to possible disruptions from top piped gas supplier Turkmenistan and logistics hiccups in receiving LNG imports when heavy flows of shipments arrive.

Turkmenistan could reduce daily supply by 5-15 million cubic metres (mcm) during the coldest month, as the country has been increasing gas exports to Russia since 2019, said Li Wei, vice general manager from PetroChina’s natural gas sales department.

Gas demand will total 148 billion cubic meters (bcm) this winter, up 11.8 bcm year-on-year, Meng Yadong, an executive at Sinopec’s gas marketing company told a seminar hosted by Chongqing Petroleum and Natural Gas Exchange.

Demand in the 2019/2020 winter only rose 0.3% year on year, as it was badly hit in the first few months of 2020 by the pandemic.

Sinopec expects China’s total gas consumption to rise by 9 bcm, or 3% year-on-year, to 310 bcm in 2020, while CNOOC forecast 320-325 bcm.

This is in line with a previous government forecast that pegged China’s 2020 gas demand growth at the slowest pace in five years as the pandemic hit economic activity.

Top oil and gas producer PetroChina said it expected to supply 98.6 bcm this winter, up 10 bcm from last winter.

The firm also pumped 6% more gas into its underground storages that totalled 9.06 bcm by the end of September, said a company storage executive.

Sinopec, which analysts said emerged as a leading global buyer of spot LNG this year on cheap Asian prices, said its winter gas supply would reach 26.3 bcm.

CNOOC, which relies on LNG imports for 72% of its supplies, plans a total supply of 22.93 bcm this winter.

Piped gas from Russia via the Power of Siberia project that started running a year ago will transport 14 mcm a day this winter, up from 8 mcm last winter, said PetroChina’s Li.
Source: Reuters (Reporting by Muyu Xu, Min Zhang and Shivani Singh in Beijing, and Chen Aizhu in Singapore; Editing by Gerry Doyle and Mark Potter)

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