Natural Gas Weekly Update
In the News:
China’s natural gas consumption and LNG imports declined in 2022
In 2022, annual natural gas consumption in China declined by 1% (0.4 billion cubic feet per day [Bcf/d]) compared with the previous year, according to data from S&P Global Commodity Insights—the first decline in annual consumption since 1990, according to our International Energy Statistics. The decline in natural gas consumption resulted from slower economic growth, mainly from China’s zero-COVID policies, which led to widespread lockdowns, as well as government policies that re-prioritized supply security (including growth in coal production) over emissions targets.
China’s natural gas consumption more than tripled between 2010 and 2022, from 10.4 Bcf/d to 35.1 Bcf/d. The industrial sector led China’s natural gas consumption growth over this period, increasing by 10.3 Bcf/d, followed by the residential and commercial sector at 6.5 Bcf/d and the electric power sector at 3.4 Bcf/d. Rapid growth in China’s natural gas consumption over the last decade resulted from strong economic growth, urbanization, and environmental policies that supported coal-to-natural gas switching in an effort to reduce air pollution and meet emissions targets.
Rapid growth in domestic natural gas production, which more than doubled from 8.9 Bcf/d to 20.5 Bcf/d between 2010 and 2022, met about half of the increase in demand. Domestic production expanded by more than 1.0 Bcf/d every year since 2017, mainly because of growth in production from discrete gas reservoirs and associated natural gas from oil production. Production has also increased from low-permeability formations including tight gas, shale gas, and coalbed methane. In 2019, the Chinese government introduced a subsidy program that established new incentives for production of natural gas from tight gas formations and extended existing subsidies for production from shale and coalbed methane resources. Between 2019 and 2022, tight gas production increased by 0.6 Bcf/d and shale gas production increased by 0.8 Bcf/d.
Despite significant growth in domestic natural gas production, China has become increasingly dependent on natural gas imports to meet growing natural gas demand. Natural gas imports [combined pipeline and liquefied natural gas (LNG)] accounted for 46% of China’s total natural gas supply in 2021 and 42% in 2022, an increase from 15% in 2010.
After becoming the world’s largest LNG importer in 2021, China’s LNG imports fell by 20% (2.0 Bcf/d) in 2022, mainly because of lower demand and high LNG spot prices. China’s LNG imports averaged 8.3 Bcf/d in 2022—the lowest level since 2019, according to data from China’s General Administration of Customs. Prior to 2022, China’s LNG imports declined only once—in 2015—by a much smaller volume. Imports by pipeline offset some of the declines in LNG imports, increasing by 8% (0.4 Bcf/d) in 2022 compared with 2021, mainly because of increased flows from Russia via the Power of Siberia pipeline.
