China searches for solution after being hit by natural gas shortage

Updated 2018-01-04 14:00:21 Global Times

This winter, the supply of natural gas in China is more acute than ever before.

"It was a mess when the natural gas pipeline pressure suddenly plummeted on November 21 - just in the first week of northern China's winter heating season," an unnamed executive from a gas company based in North China's Hebei Province told domestic financial news publication Caixin Weekly.

The drop in pipeline pressure was due to a national supply shortage, which prompted the local government in Hebei to initiate the first round of cleaner fuel supply cuts among factories on November 27.

One week later, Hebei issued an orange alert warning for gas shortages, the second most critical level on a four-tier scale. This meant that the province began facing a gas supply shortfall of between 10 and 20 percent from its current needs.

Also in November, the China National Petroleum Corporation (CNPC), one of the country's "big three" oil organizations, issued a notice, warning domestic enterprises about a dramatic decline in natural gas supply from Central Asia. The company also told downstream enterprises that natural gas sales would be cut by about 10 million cubic meters in northern regions from November 21.

Although the supply of natural gas from Central Asian countries rebounded to 110 million cubic meters a day in late December - as high as it was in the same period of December 2016 - after the Chinese government sent representatives to those nations for negotiation purposes, there is still a gap between the amount actually being supplied and the contracted number, the Caixin report noted.

"Such inadequate [natural gas] supply from foreign sources, as well as the nation's push to switch from coal to natural gas for both residential heating and industrial processes - which has led to a larger-than-expected rise in demand - has exacerbated the supply-demand imbalance this winter and sparked widespread public complaints," an anonymous industry insider from the energy sector told Caixin Weekly over the weekend.

"But the central government's policy direction is accurate and [has been] successful, as we have seen cleaner skies and improved air quality this winter," he added.

Shortfall in Central Asia

"In fact, [domestic supply] shortage on a large scale can be avoided if foreign supply sources run perfectly," said a CNPC staff member, who prefers to remain anonymous.

So far, imports from the China-Central Asia natural gas pipeline have accounted for about 40 percent of China's total natural imports, with three Central Asian countries, namely Turkmenistan, Uzbekistan and Kazakhstan, acting as the country's major sources for gas imports.

But since October, natural gas transmitted through the pipeline has posted sharp declines, with the start of the heating season in mid-November further pushing the energy shortage issue to the surface.

For example, natural gas imports from Turkmenistan slid for three consecutive months from September, according to data from China Customs.

Furthermore, in early December, the amount of natural gas imported from Turkmenistan averaged at 35 million cubic meters per day, half the targeted amount of 71 million cubic meters in daily supply, it noted.

An industry insider said that the sudden plunge in gas supply from neighboring sources highlighted the possibility that the Central Asian countries may consider switching to energy cooperation with European nations. Turkmenistan's reported negotiations with European countries over gas supply provided a clue, according to the Caixin report.

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