Natural gas supply shortage from Turkmenistan driving up prices in China amounts to ‘hype’: NDRC

By Chu Daye and Zhang Hongpei Source:Global Times Published: 2019/1/9 21:43:11

Move part of environmentally friendly policy



A worker operates a natural gas transport device at a base in Zibo, East China's Shandong Province, on October 21, 2018. Photo: IC



Chinese authorities and leading energy companies are firmly treading on the path of clean energy in the long term, while guaranteeing a sufficient supply of natural gas amid the country's transformation toward greater use of the environmentally friendly fuel.

There will be a balance between this winter's supply and demand for natural gas, via pipeline transmission and shipments in the form of liquefied natural gas (LNG), thanks to preparations that were made early in 2018, industry analysts told the Global Times.

Vice Premier Han Zheng said on Wednesday that building of systems involving natural gas production, supply, storage and sales should be accelerated and energy supply ability should also be strengthened, the Xinhua News Agency reported.

The National Development and Reform Commission (NDRC), China's top economic planner, said in a statement Tuesday that reports claiming a natural gas supply shortage from Turkmenistan could drive up natural gas prices in China amounts to "hype." 

The reports are not accurate, an NDRC official said, according to the agency's website. 

The comments came after domestic news site jiemian.com reported on Tuesday that Turkmenistan's state-owned energy major Natural Gas Konzern slashed natural gas supplies to its partner China National Petroleum Corp (CNPC).

The news raised concern about the security of China's natural gas supply, especially during the winter when demand for the clean fuel is at its peak. Last winter, a gas shortage left some households in the freezing cold. 

"It is highly unlikely for the country to experience another natural gas shortage in the winter of 2018," Liu Guangbin, an analyst at sci99.com, a bulk commodity information website, told the Global Times Wednesday.

Construction of natural gas storage tanks and better pipeline connections were undertaken early in 2018, so there is no need to worry about a supply shortage this winter, Liu noted.

Natural gas supplies in northern China have been generally stable since the heating season began on November 15, 2018, with daily supply staying at above 0.83 billion cubic meters, the NDRC official said.

"China is prepared and has the capacity to ensure winter natural gas supply, with underground gas storage from China's three oil majors and LNG in storage tanks holding about 9 billion cubic meters of natural gas. Massive volumes of LNG are being shipped to Chinese ports," the official added.

"There have been multiple short-term fluctuations in gas supplies from Turkmenistan's Konzern, but the shortages have been brief and had only a limited impact," the official said.

Since Tuesday afternoon, supply from Konzern has recovered to the contracted volumes, the official said, citing sources from CNPC, the Chinese State-owned oil and gas major. 

In addition to the supply-side efforts, the demand for gas, in line with China's energy shift from coal to gas, is also being gradually adjusted based on reality this winter, said Li Li, director of research at the Shanghai-based research and consulting firm ICIS China.

She estimated that domestic demand will continue to show double-digit growth in 2019, and imports of natural gas are likely to overtake those of Japan in the past year.

China's imports of natural gas reached 81.19 million tons in the first 11 months of in 2018, up 33.8 percent year-on-year, figures from the General Administration of Customs showed.

China's natural gas imports via pipelines mainly come from Turkmenistan, Kazakhstan and Myanmar, while the main LNG sources include Qatar and Australia.

"The two import approaches take a 50-50 approach, but there's been an obvious rise in the number for LNG," Liu noted.

The NDRC vowed to crack down on market-fixing and price-gouging of natural gas to ensure "proper order in the natural gas market."

CNPC said on Wednesday that it will actively stabilize the LNG price and maintain steady order in the gas market.

Imported LNG prices more than doubled from September to December in 2017 during that year's heating season, media reports said.






Newspaper headline: Natural gas supply guaranteed


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