The Rise of Oil and Gas Fueling Stations in China’s LNG Sector


In China, consumption of energy occurs mainly in the eastern coastal region; however, the production of usable energy, including natural gas, is mainly concentrated in the western region. Influenced by factors like uneven distribution of natural gas resources, limited development of natural gas pipeline networks and the huge demand for natural gas generated by domestic economic growth, liquefied natural gas (LNG) with convenient storage and transportation has developed greatly.
During 2009-2014, the total capacity in the LNG supply market rose from 13.88 million t/a to 56.63 million t/a, up 308%. During 2011-2014, the annual capacity growth in the LNG supply market basically remained at more than 30%.
Corresponding with the rapid capacity growth, the consumption of LNG climbed from 1.44 million tons in 2009 to 7.84 million tons in 2014, up over 400%. China’s consumption of LNG during 2009-2014 is listed in Figure 1.
From the second half of 2014 to the end of 2015, due to the drastic decrease of international oil prices, the prices of downstream products like oil products and liquefied petroleum gas (LPG) also declined. Influenced by the lower price of natural gas, the price of LNG decreased from RMB5 265/t to RMB3 700/t in 2015.
Due to its weak price competitiveness, some LNG consumption has been displaced by products like LPG and fuel oil, and the growth of demand for LNG has slowed down. The demand downturn in the market suppressed the growth of supply capacity, so the capacity growth in the LNG supply market was less than 4% in the first half of 2015, and the overall LNG market entered an “industrial winter”.

LNG vehicles and vessels have broad application prospects

At present, China’s consumption of LNG is mainly concentrated in fields such as motor vehicles and marine vessels, urban gas, industry and electricity generation. The gas for motor vehicles and marine vessels has good development momentum, and its proportion in the LNG consumption mix has increased significantly.
The rapid expansion of LNG application in motor vehicles and marine vessels is mainly due to the support of national policy. The carbon emission of an LNG vehicle is far lower than that of a gasoline vehicle. As a clean energy, LNG was China’s key vehicle energy project during 2011-2015. The application of LNG in the fuel of motor vehicles and marine vessels has been supported and encouraged by a series of national policies, opening a new era of using LNG to replace diesel.
China’s LNG vehicle sector has developed drastically with an average annual growth of over 100% during 2010-2014. LNG vessels in the Yangtze River waterway and the Beijing-Hangzhou Grand Canal waterway have also developed rapidly.
The construction of an LNG fueling station network is the key condition to realize the large-scale application of the LNG vehicles, and with the rapid development of the LNG motor vehicles and marine vessels market, the construction of domestic LNG fueling stations has also been launched in certain regions. During 2010-2014, the number of LNG fueling stations drastically increased from more than one hundred in 2010 to 2122 in 2014. The fastest growth appeared in 2012, being 220%. After 2013, due to the slowdown of LNG vehicle growth, the construction of fueling stations also slowed down.
In spite of the fast growth in recent years, the growth of LNG fueling stations has always been slower than that of LNG vehicles. The market shortage of LNG fueling stations still exists, restricting the development and promotion of the LNG transportation sector to a certain extent.

LNG oil and gas fueling stations are becoming more numerous

In order to promote the development of the domestic LNG fueling sector, the National Energy Administration has compiled technical, design and construction specifications to create a basic condition for the large-scale promotion of LNG fueling station construction.
“Oil and gas fueling station” refers to an LNG fueling project based on rebuilding or expanding an existing filling station outlet, forming a joint site including an LNG fueling station and a gasoline and diesel filling station. The rebuilding of LNG oil and gas fueling station should be conducted in the qualified filling station. Oil and gas fueling stations all have advantages, whether in examination and approval or return on investment and safety, and they will become an important support for LNG sector in the coming period. Therefore, more and more investors will transfer their future development focus of LNG fueling stations to the reconstruction of oil and gas fueling stations.