LNG

China’s National Development and Reform Commission (NDRC), the nation’s economic planning body, has urged energy companies to increase imports of liquefied natural gas and thermal coal for power generation as colder weather hits northern China around the capital Beijing and is forecast to last for weeks.

China Petroleum and Chemical Corp. (Sinopec), one of the largest LNG importers, said it would seek more volumes on the spot market.

Sinopec and PetroChina, the Hong Kong-listed affiliate of China National Petroleum Corp. and another LNG importer, have also said they would be increasing shale-gas production under five-year plans.

Sinopec, a shareholder in the Australia-Pacific LNG plant in Queensland operated by ConocoPhillips, said its regasification terminals at Tianjin Port in the north and the east China Qingdao facility would both handle record volumes in January.

The company said it would also increase domestic natural gas production by another one million cubic metres per day by the end of January by accelerating the drilling of new development wells.

Sinopec said it was additionally extracting gas from its underground storage in central and east China, while maintaining high inventories at LNG storage tanks.

Chinese LNG imports soared to a record in November and surpassed the monthly total of shipments received by Japan, the world’s largest LNG importer.

Another record of LNG volumes is forecast to be announced for December. China’s November imports amounted to 6.61 million tonnes, 2.4 percent from a year earlier, while Japan’s November shipments came to 6.02MT.

For the first 11 months of the year, China received shipments totalling 59.54MT, an increase of 10.7 percent compared with the same period of 2019.

November 2020 is the fifth time that China had taken the position of the largest LNG importing country on a monthly basis, following November 2019 and May, June and August 2020.

China’s main LNG suppliers are Australia, Qatar, Malaysia, Indonesia, Russia and the US.

At the same time, PetroChina and Sinopec are planning to increase their shale-gas output over the next several years from the Sichuan shale basin in central China.

PetroChina aims to more than double shale gas production in Sichuan to more than 22 billion cubic metres by 2025.

That will surpass a target set by Sinopec, which led China’s shale gas development with the first commercial discovery at Fuling in Sichuan, from the current 7.5 Bcm of output to 13 Bcm by 2025.

Sinopec has added 83 Bcm of newly proven reserves that have yet to enter production at the Chuanxi field in Sichuan.

The reserves, certified by the Chinese Ministry of Natural Resources, raise the field’s total proven resources to 114 Bcm.

The reservoir is spread over 138 square kilometres in the western part of the basin at depths of 6,000 metres.

However, shale gas output is limited in China in that by 2025 the total annual production by Sinopec and PetroChina combined would only amount to the LNG shipments from one large US Gulf Coast LNG export plant.

PetroChina’s shale operations are centred in the Yibin, Zigong, Neijiang, Luzhou and Yongchuan regions of the Sichuan Basin.

The company started appraising shale gas blocks in the Sichuan basin in 2006 and made its first major discovery with the Wei-201 well in 2010.

China, the world's largest combined importer of liquefied natural gas and pipeline volumes, is moving forward with its plans to create a single pipeline company from the existing assets of the Chinese energy majors, a move that is expected to benefit LNG imports rather than hinder them.

Ten liquefied natural gas carriers from Australia, the Middle East and Africa are heading for Chinese import terminals and another dozen are waiting offshore for orders and destinations in the nation’s network of 20 regasification facilities as winter shipments to China gather pace.

The Chinese National Development and Reform Commission (NDRC) has reformed the wholesale pricing mechanism of natural gas and will start to unify prices from June 10 for residential and industrial users as domestic demand grows along with LNG and pipeline imports.