China's demand for natural gas: drivers and prospects

Abstract

Sustained economic growth in China has triggered a surge of energy and mineral consumption and imports, including natural gas. This study presents recent trends in China’s demand for natural gas in a global context and discusses its drivers and prospects. In the past decade, drivers of China’s demand for natural gas are mainly associated with its rapid economic growth, path of industrialisation and urbanisation. With more than 1.3 billion people and a rapidly rising income level, China’s demand for energy has surged. It is increasingly difficult for domestic production capacity to supply all of this demand, especially when China’s limited domestic reserves are considered. The prospect of potential growth in natural gas consumption and imports is expected not only due to China’s economic growth, but also a policy imperative (e.g. the 12th Five Year Plan) to increase the share of clean energy sources such as gas and efficient fuels in the energy supply mix, as well as improving energy intensity and other factors that will influence energy sector outcomes. It also establishes that LNG, in addition to pipeline supplied gas, is likely to be an important source of energy in China in the coming decade; therefore, due to rebalancing its energy mix and increasing the share of non-coal energy sources in China’s energy market, it is anticipated that China will be more dependent on overseas supply of natural gas to fill the gap between domestic production and consumption.