CNPC has decided to step up investment in gas upstream as it seeks to nearly double its gas output to 180 Bcm/y by 2020. Hou Qijun, head of CNPC’s planning department, announced the gas proportion of CNPC's budget will continue to rise; he stressed the cleaner-burning fuel is "our top priority with high potential for profit growth."
As China’s leading oil company, CNPC now spends around 70% of its total budget on gas production and nearly 10% on constructing gas pipelines, Hou said. As CNPC’s sees it, gas has a “virtually unlimited future in China.”
The company’s in-house research arm anticipates a 167% surge in China’s gas consumption by 2030, reaching 510 Bcm. Thereafter, gas demand is forecast to reach 710 Bcm by 2050 – a 270% rise compared to levels around 191 Bcm seen last year.
Sinopec also seeks to double annual gas production to 40 Bcm by 2020, Bloomberg reported, citing a statement by company chairman Wang Yupu. The company’s gas output increased 10% to 11 Bcm in the first half of this year, while crude oil production fell 11.4%.
NDRC figures indicate demand recovery
Bullish national figures were also issued by the National Development and Reform Commission (NDRC), which reported that China's gas consumption rose 9.8% to 99.5 Bcm in the year through June. This strong growth indicates a partial recovery from last year’s sluggish demand.
Yet, figures from the National Bureau of Statistics (NBS) indicate that revenue for oil and gas extraction plunged 26.5% during the first half of this year. Upstream companies seem to cut back on oil exploration in favour of gas – keeping a tight lid on overall costs.
China’s power sector will be the key destination for the additional domestic gas production.
The 13th five-year plan period (2016-2020) is about to be released by China’s National Energy Administration (NEA). The plan will set out measures of a supply-side structural reform as the government seeks to keep coal consumption under 5 billion metric tons, reigning in its share in the power mix to 58%.