In China, natural gas consumption can be classified into four categories: industrial fuel accounts for 38.2%, urban gas consumption accounts for 32.5%, power generation accounts for 14.7%and that in the chemical industry accounts for 14.6%. Due to the increasing awareness of environmental protection, China is making efforts to promote the use of clean energy. In the 2017 report on the work of government, it is clearly proposed to improve the energy structure by increasing clean energy consumption by 1.7% and reducing coal consumption by 2%. In this sense, the consumption of natural gas is expected to grow.
“Coal to gas” project is beneficial to improve the energy structure.
Coal traditionally dominates the domestic energy industry. It accounts for approximately 70% in industrial fuel, far higher than the figure of 15% in western countries. It is therefore necessary to adjust the proportion of industrial fuel in order to improve the energy structure. One effective measure is shifting from coal to natural gas.
The progress of urbanization contributes to the increasing population using natural gas.
In 2016, China’s urbanization rate was 57%. It is estimated that this figure will reach 60% in 2020, and further rise up to 70% in 2030. With the promotion of urbanization, there are remarkable increases not only in the number of natural gas pipelines in cities and towns but also in the number of population using natural gas. Over the past decade, the CAGR of the length of natural gas pipelines has been recorded at 17%, accompanied by the CAGR of people using natural gas at 15% and the CAGR of natural gas supply in cities at 17.5%.
Gas power generation industry develops rapidly owing to a stable increase in the scale of gas installed capacity and support from industry policies.
In 2016, national power consumption in China was 5.92 trillion kWh, with an increase of 6.7% YoY. The installed capacity of natural gas was 66.37 million kW, accounting for 3% of the national installed capacity. The power generating capacity of gas was 165.8 billion kWh, accounting for 2.9% of the national power generating capacity. The report on the work of government proposes that enterprises should strive to develop clean energy and reduce thermal power generation of more than 50 million kW in 2017.
In 2016, China’s LNG import volume was 26.15 million tons, up by 32.97% compared to 2015.
According to CRI, China’s urban fuel gas market is highly fragmented. Mergers and restructurings are under way to improve the bargaining power and to lower costs.
Oil and natural gas fuel companies refer to comprehensive oil companies engaged in the exploration, refining, sales, transportation and chemical engineering of oil and natural gas.