China’s natural gas demand to grow 10%

Crude imports will continue to grow, but more slowly, CNPC chairman says.

China’s oil demand is expected to grow at a rate well below overall economic growth through this decade. But natural gas is expected to see double-digit growth thanks to initiatives toward cleaner burning fuels, according to an executive at China’s largest oil company.

Yilin Wang, chairman of China National Petroleum Corporation (CNPC), told attendees at the HIS CERAWeek conference in Houston that China’s crude oil demand should grow about 2.8% per annum, reaching 12 million barrels per day by 2020.

That is lower than the 6% to 7% economic growth Chinese officials have forecast in their most recent five-year plan. China had seen per-annum oil consumption growth of 4.2% from 2011 through 2015.

“Growth of energy consumption is slowing down,” Wang said.

Imports account for nearly two-thirds of that crude. Wang did not specify the future role of imports. But with most of China’s domestic production coming from mature fields and new reserves in expensive-to-develop offshore locations, imports will continue to be a major part of the country’s supply.

While the country’s demand for gasoline will continue to grow, Wang says diesel demand will continue to slump with the decline of China’s industrial sector. That excess supply is increasingly finding its way via seaborne trade to other markets, with China recently overtaking refining powerhouse Singapore as Asia’s largest supplier of diesel and gasoil.

“Diesel demand in China is not growing significantly,” Wang said.

Yet Wang expects natural gas to account for a growing part of the country’s energy mix, with natural gas demand expected to grow 10% through 2020, reaching 233.6 million tonnes. Wang said there could also be upside potential to that forecast depending on efforts to switch away from coal fired power generation.

China’s domestic production could account for about 130 million tonnes of that demand, with the remainder coming through pipeline and LNG imports.