China National Petroleum Corp. (CNPC), China's largest oil and gas firm, projected a larger role for natural gas over the next five years as the company positioned itself to boost its supplies and expand the transportation capacity for the fuel during this period, CNPC's Deputy Director of Planning Zhao Zhongxun said, as quoted Friday in the U.S. edition of China Daily.
The Chinese state-owned firm supplies more than two-thirds of the country's natural gas consumption, which, according to statistics from the U.S. Energy Information Administration, stood at 5.7 trillion cubic feet (Tcf) in 2013, or 12 percent higher in 2012. CNPC plans to sell more than 26.5 Tcf (750 billion cubic meters or Bcm) of natural gas between 2016 and 2020, a 40 percent increase over the previous five years, Zhao said in the China Daily.
"Our top priority is to boost domestic supplies of natural gas, then adjust imports based on demand, and at the same time expand our pipeline network and capacity of LNG (liquefied natural gas) terminals," he said when providing an outline of CNPC's new five-year plan for natural gas at a "green development" forum in Beijing.
The CNPC blueprint revealed that the company's pipeline network is expected to exceed 67,283 miles (60,000 kilometers), with an annual gas transportation capacity of 6.4 Tcf (180 Bcm) by 2020.
In addition, the Chinese major intends to add 12 gas-storage facilities in the country, while the receiving capacity of its three LNG terminals will be expanded from 13 million tons to 19 million tons.
CNPC's investment in natural gas, including exploration, is expected to continue despite cutbacks in capital spending worldwide due to the slump in global oil prices that began in the second half of 2014, an unnamed industry source told China Daily, without providing details on the firm's budget on natural gas.
PetroChina Co. Ltd., CNPC's listed unit, reported April 28 that its Natural Gas and Pipeline business posted a "profit from operations of $710 million (CNY 4.7 billion) in the first quarter of 2016, of which the net loss incurred from sales of imported gas and LNG narrowed by 151.9 million (CNY 1.1 billion) from the same period last year."
Company spokesman Qu Guangxue said there will be greater promotion of gas-fired power plants and the use of natural-gas-powered vehicles in China -- a development expected to boost domestic demand for natural gas.
CNPC already imports a third of its natural gas from Central Asian countries such as Kazakhstan and Turkmenistan, with future supply augmented by imports from Russia commencing in 2019 upon completion of the Chinese section of Sino-Russia pipeline, Zhao said.
The CNPC executive said the firm grew its natural gas supplies by 13 percent during the first three years of its 12th Five-Year Plan (2010-15) although demand from industries including sectors such as smelting, construction, and glass production, shrank in 2015.
Still, industry watchers expect gas prices to rebound slightly in China over the next few years as a result of a policy by the government to encourage cleaner energy to combat the country's notorious air pollution resulting from the use of cheap coal.
"Natural gas is a practical choice for China ... as the country increases its share of non-fossil fuel in its energy mix, and relies more on alternatives," Gao Jian, a senior analyst at commodities consultancy Sublime China Information Co. Ltd. said, as reported in the China Daily.
The Chinese government plans to boost the share of natural gas in the country's total energy mix to 10 percent by 2020, double the current level, Gao said.
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