Supply-Demand Forecast of China’s Natural Gas

Natural gas is the cleanest, high-caloric and low-carbon fossil fuel. Compared with petroleum and coal, it offers lower carbon emission factors.
   Boosting the consumption of low-carbon energies like natural gas is a basic strategy for reducing carbon emissions, making China’s energy consumption structure more reasonable. A low-carbon energy structure not only reduces carbon emission, but it can help China develop low-carbon economy.

1. Domestic Wide Applications

1) Natural Gas for Power Generation – As gas-fired power plants discharge less pollution than coal-fired/oil-fired ones, as well as generating electricity efficiently and consuming less water, they have developed rapidly in recent years, consuming more and more natural gas, reaching 21.49 billion m3 (20.31% of the total gas consumption) in 2010.
2) Natural Gas for Chemical Industry – Boasting lower energy consumption, better environment-friendliness and lower production costs, natural gas could be used to produce synthetic ammonia and methanol, bringing economic benefits 20-30 times higher than those generated by coal and petroleum. In 2010, China’s chemical industry consumed 11.43 billion m3 of natural gas, 10.8% of the total.
3) Industrial Fuel – With high calorific value and carbon/hydrogen ratio, natural gas, existing in a gaseous state under normal temperature, has less negative impact on the environment and boasts higher efficiency compared with other fossil fuels. For example, the efficiency of an industrial coal-fired boiler is 50%-60%; a gas-fired boiler, 80%-90%. Therefore, using natural gas instead of coal and petroleum is an effective way to reduce carbon emission. In 2010, China consumed around 37.37 billion m3 of industrial gas, 35.32% of the total.
4) Urban Gas – China is developing civil/commercial gas, which will greatly improve urban air quality. The consumption of urban gas reached 35.52 billion m3 (33.57% of the total) in 2010.

2. Supply-Demand Prediction

1) Domestic Gas Supply Continues to Grow – With an average annual growth rate of 13.36% from 2000 to 2010, domestic output of natural gas reached 94.48 billion m3 in 2010, and is expected to increase to 149.9 billion m3 in 2015, and 222.1 billion m3 in 2020, boasting an average annual growth rate of 8.92% from 2010 to 2020.
2) Imported Natural Gas Maintains Rapid Growth – China’s per capita  recoverable coal reserves are just 60% of the world average; per capita consumption of oil and natural gas, 6.2% and 6.7% of the world average. Twelve percent of domestic primary energy consumption was supplied by imports in 2010. Foreign dependence for petroleum is more than 55%; natural gas, 15.70%. More coal is imported than exported. During the 12th Five-Year Plan period (2011 - 2015), the State will promote LNG projects and continuously construct transnational pipelines. Increasing more than 11.01% a year, imported natural gas is expected to exceed 28 billion m3 in 2015, reaching around 50 billion m3 in 2020.
3) Demand for Natural Gas Grows Rapidly – The country consumed 105.8 billion m3 of natural gas in 2010, rising 18.20% YOY. The annual consumption growth rate was 16.18% from 2000 to 2010, expected to decline to 13.04%, 2010 - 2020, 4.12 percentage points higher than the output growth rate during the same period. China’s demand for natural gas is predicted to be around 205.7 billion m3 in 2015, rising to 360.5 billion m3 in 2020.

Table 1 Carbon Emission Factors of Coal, Petroleum and Natural Gas (t/t Standard Coal)
Sources    Coal    Petroleum    Natural Gas
DOE/EIA    0.702    0.478    0.389
Institute of Energy Economics, Japan    0.756    0.586    0.449
Climate Change Projects of the State Scientific and Technological Commission    0.726    0.583    0.409
Energy Research Institute, National Development and Reform Commission    0.7476    0.5825    0.4435
Average    0.7329    0.5574    0.4

Table 2 Forecast of China’s Natural Gas Output in 2020
Year    Actual Output (billion m3)    Growth Rate (%)    Year    Predicted Output (billion m3)    Growth Rate (%)
2001    29.969    11.12    2011    103.31    9.35
2002    32.438    8.24    2012    114.03    10.37
2003    34.493    6.34    2013    125.36    9.94
2004    40.849    18.43    2014    137.32    9.54
2005    49.950    22.28    2015    149.90    9.16
2006    58.553    17.22    2016    163.10    8.80
2007    67.736    15.68    2017    176.93    8.47
2008    77.050    13.75    2018    191.35    8.16
2009    84.310    9.42    2019    206.42    7.87
2010    94.480    12.06    2020    222.10    7.60
Annual Growth Rate from 2000 to 2010    13.36 Annual Growth Rate from 2010 to 2020    8.92

Table 3 Forecast of China’s Demand for Natural Gas in 2020
Year    Actual Demand (billion m3)    Growth Rate (%)    Year    Expected    Demand (billion m3)    Growth Rate (%)
2001    27.430    16.19    2011    121.72    15.04
2002    29.184    6.39    2012    140.34    15.29
2003    33.908    16.19    2013    160.22    14.17
2004    39.672    17.00    2014    181.76    13.44
2005    46.763    17.87    2015    205.72    13.18
2006    56.141    20.05    2016    230.72    12.15
2007    70.520    25.61    2017    261.03    13.14
2008    81.290    15.27    2018    290.54    11.30
2009    89.520    10.12    2019    326.73    12.46
2010    105.81    18.20    2020    360.50    10.33
Annual Growth Rate From 2000 to 2010    16.18    Annual Growth Rate From 2010 to 2020    13.04