China gas and power month in brief: can summer storage stop winter shortage? Report

Insight 29 August 2018

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Report summary

China remains the hottest gas market globally. In July, its gas demand was up by 18% year-on-year, LNG imports up by 33% and pipeline imports up by 23%. The traditionally weak summer market turned out to be impressive, driven by strong industrial and power demand as well as earlier-than-usual storage injection. But will China yet again see gas shortages this coming winter as demand remains strong? The answer is mixed. The country can secure more LNG supply as CNOOC and ENN have commissioned their Shenzhen and Zhoushan terminals. Additional LNG imports into Guangdong through the Shenzhen terminal can save west-east pipeline flows for northern markets. But demand faces more downside risks. The proposed 25% tariff on US LNG could push up winter LNG prices if implemented. Also CNPC’s proposed winter gas pricing mechanism would inflate city-gate prices by 20% to 40% depending on users and regions.

Executive summary
Markets
- Earlier-than-usual storage injection adds to summer demand
- Power demand growth remains strong
Policy
- China proposes 25% tariff on US LNG
- Guangdong releases policy on city-gas distribution pricing
- NDRC urges local governments to lower power tariffs
Corporate activity
- PetroChina proposes winter gas pricing mechanism
- CNOOC to offer third-party access to its regas terminal via SHPGX
- ENN commissions Zhoushan terminal
- CNOOC commissions Shenzhen terminal
Smog watch
- Environmental inspections continue

Tables and charts

This report includes the following images and tables:

Monthly gas demand, bcm
Monthly LNG imports, Mt
Monthly power demand, Twh
Beijing AQI

What's included

This report contains:

Infrastructure tracker_August 2018.xlsx

XLSX 359.51 KB
Dashboard_August 2018 (updated).xlsx

XLSX 107.18 KB
China gas and power month in brief: can summer storage stop winter shortage?

PDF 2.28 MB