Commodity Market Report
China gas markets long-term outlook H1 2020
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Report summary
2019 saw China face multiple headwinds in gas demand creation. Amid economic slowdown and moderating coal-to-gas switching, gas demand grew by 8.6% In Q1 2020, gas demand was hit by the coronavirus pandemic. However, compared with other energy commodities, gas demonstrated its resilience thanks to its wide range of end-use applications and lower prices. We expect full-year demand to grow by 3%. The pandemic will have lingering effects on China’s gas demand. In this update, we’ve adjusted down China’s gas demand in the period of 2020 to 2030 compared with our H2 2019 outlook, primarily due to policymakers’ more cautious approach towards fuel choices, increased concerns around user affordability, and the downgraded GDP forecast. However, China remains firm on cleaning up its air quality and energy mix, where gas will have its role.
Table of contents
- Introduction
- Structure of gas demand will gradually change with increasing seasonality
- Increased investment in domestic upstream is bearing fruit; long-term production potential hinges on unconventional sources
- Gas-on-gas competition will intensify, but China is on track to become the largest LNG importer
- PipeChina is just the beginning of the next reform journey
- Key data tables
-
Gas sector policy and regulation
- PipeChina makes its debut
- Implementation of reform measures sees mixed progress
- Reducing energy costs is a top policy theme
- Regulatory structure
- Gas demand overview
- Industrial sector (including feedstock)
- Residential, commercial and space heating
- Transport sector
- Power sector
- Domestic conventional supply
- Unconventional supply: tight gas
- Unconventional supply: CBM and CMM
- Unconventional supply: synthetic natural gas (coal-to-gas)
- Unconventional supply: shale gas
- Supply cost stack
- Pricing of pipeline imports
-
Gas imports – pipeline
- Central Asia imports
- Turkmenistan
- Uzbekistan
- Kazakhstan
- Myanmar imports
- Russian imports
- Russia East-Power ofSiberia
- Russia West -Altai
- Russia Far East
- Power of Siberia II via Mongolia
- Gas imports – LNG
-
Trunk pipelines
- Existing
- Under development and proposed
- Domestic gas infrastructure – underground storage facilities
-
Gas import infrastructure – LNG
- LNG receiving capacity outlook to 2040, as of August 2020 (mmtpa)
- CNOOC and its joint ventures
- CNPC-PetroChina
- Sinopec
- Non-NOCs
- China Oil & Gas Piping Network Corporation (PipeChina)
- Gas import infrastructure – pipelines
- Regulation overview
-
City-gate gas pricing
- Trial stage (2011-2013)
- Two-tier pricing stage (2013-2015)
- Price adjustments and ending of cross-subsidisations for residential and fertiliser sectors (2015-2019)
- Paving the way for full deregulation of city-gate price (2020)
- City-gate gas pricing in policy versus in reality
-
The role of trading platforms
- Shanghai Petroleum and Natural Gas Exchange (SHPGX)
- Chongqing Petroleum and Natural Gas Exchange (CQPGX)
- Shenzhen Natural Gas Exchange
-
Pipeline tariffs
- Interprovincial transmission pipeline tariffs
- Provincial transmission and local distribution tariffs
-
Prices at end-user level
- Power
- Industrial and commercial
- Residential
- Transport
- Value-added tax on natural gas
- Appendix – end-user prices in provincial capital cities
Tables and charts
This report includes 47 images and tables including:
- China gas demand by sector
- China gas demand by province
- China gas market balance
- Supply changes vs H2 2019 outlook
- China power market balance
- Economic indicators
- China energy policy making and regulatory structure
- Total energy demand and gas’ share
- Total China gas demand by sector
- Total China gas demand by province
- Industrial fuel gas demand by provinces
- Fertilisers and chemicals gas demand by top province
- Residential/commercial gas demand by province
- Winter heating gas demand by province
- Transport gas demand by provinces
- Transport gas demand by vehicle types
- Gas demand in power generation by region
- Power generation mix
- Domestic Gas Supply by Basin
- Gas Supply Conventional and Unconventional
- Domestic gas supply by basin (%)
- Supply growth by region/basin
- China supply cost by project – full life breakeven vs import contract price
- China supply cost by basin – remaining breakeven plus tariff assumption to Shanghai
- Assumed Turkmenistan contract price into Shanghai (2020 terms)
- Assumed Russian contract price into Beijing (2020 terms)
- China contracted LNG by project and buyer (SPAs and HOAs)
- Contracted LNG by import company
- Contracted LNG by exporting country
- Ownership structure of PipeChina, as of July 2020
- Announced transferred assets (US$ billion)
- China underground gas storage facilities map
- China supply and demand balance
- LNG Demand (Contracted vs Uncontracted)
- SHPGX and CQPGX transaction volumes
- Key facts
- Key changes to analysis from H2 2019 publication
- Summary of13th five year plan energy targets
- Trans-Asia gas pipeline route map
- Russia-China gas pipeline route map
- Key domestic gas infrastructure - existing
- Without PipeChina
- With PipeChina, as speculated
- China LNG terminals map
- Tariff rate by individual pipeline company, effective as of April 2019
- Tariffs of major pipeline routes, effective as of April 2019
- End-user prices vs. competing fuel (as of July 2020)
What's included
This report contains:
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