China is likely to see a much larger deficit of natural gas supply this year, triggered by an increased number of utilities having signed up to use it for fuel and forcing the country to import more pipeline gas and liquefied natural gas from the international market.

National Energy Administration director Zhang Jianhua said in Beijing last week that gas demand this year is to shoot up to 300 billion cubic metres, even though the domestic production will increase by a marginal mark to 170 Bcm, leaving the country to seek about 130 Bcm of gas supply from the international market.

He said that demand increase has far outstretched supply growth.

Last year, China consumed 280 Bcm of gas, of which 160 Bcm came from domestic production and 120 Bcm was supplied via imports. Gas consumption peaked at 1 Bcm per day last year, Zhang said.

The National Development & Reform Commission, the powerful economic decision maker, said that, in the first eight months of this year, gas consumption rose by 10.4% on the year to 199.2 Bcm, while domestic gas production rose by 9% to 114 Bcm and imports grew by 11% on the year to 87.5 Bcm.

The commission said the country faces serious challenges to meet winter gas demand this year, as more utilities have been retrofitted to use gas.

However, industry officials are not overly worried about a possible supply crunch this winter, arguing that gas imports will likely increase as the Power of Siberia pipeline from Russia to northern China comes on line in December.

The line, which runs 3371 kilometres from Russia to nine provinces and cities in China and terminates in Shanghai in the east, will have annual supply capacity of 38 Bcm.

In the meantime, China is also stepping up efforts to boost domestic output.

PetroChina, the country’s top gas supplier, is aiming to boost production in the Sichuan basin to 30 Bcm by the end of next year and to 50 Bcm in 2025 and 70 Bcm in 2035.

Just last week, top shale gas producer Sinopec started production at its latest shale gas find at Weirong, which is considered the largest discovery made so far in deep reservoirs in the southern part of the Sichuan basin.

The Weiye 23 well pad, which hosts five production wells, is now producing about 500,000 cubic metres of shale gas per day.

The field holds proven shale gas reserves of 124.7 billion cubic metres and Sinopec has lined up plans to establish up to 1 Bcm of production capacity there by the end of this year.

The company has pencilled in plans to drill 44 wells, with 12 having been completed.

The Dongyesheng-1 discovery well tapped reservoirs as deep as 4200 metres and flowed 310,000 cubic metres per day of shale gas upon fracking.

Sinopec’s largest shale gas field, Fuling, in Chongqing, holds 600 Bcm of proven gas in place and last year produced 6 Bcm of gas, the highest throughput since operations began in 2012.

A government plan calls for boosting national shale gas production to 30 Bcm by 2020 and further to between 80 Bcm and 100 Bcm by 2030.

Weekly

China heading for major gas deficit as supply lags