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In 2018, China's natural gas market is booming. Consumption has maintained rapid growth, natural gas production has steadily increased, natural gas imports have grown rapidly, and foreign dependence has increased significantly. The national supply and demand of natural gas is generally tight, and seasonal conflicts between supply and demand have improved. In 2019, China's natural gas demand is expected to grow rapidly, the growth rate will decline, natural gas production will increase steadily, and natural gas imports will maintain a rapid growth rate.
Review 2018 China's Natural Gas Demand Analysis
Natural gas consumption maintained strong growth. In 2018, China's macro economy ran smoothly, and environmental protection policies helped the natural gas market flourish. The state has promulgated a number of environmental protection policies, continued to promote the prevention and control of air pollution, strengthened the conversion of coal to gas in the civil, heating, and industrial sectors in key areas, and the country's natural gas consumption increased rapidly. The annual natural gas consumption is estimated at 276.6 billion cubic meters, with an annual increase exceeding 39 billion cubic meters, with a growth rate of 16.6%, accounting for 7.8% of the total primary energy consumption. Natural gas consumption during the off-season was not short. Power generation, city gas, and industrial gas increased significantly, while chemical gas consumption declined. In 2018, it is estimated that urban gas consumption will be 99 billion cubic meters, an increase of 16.2%; industrial gas consumption will be 91.1 billion cubic meters, an increase of 20.0%; gas consumption for power generation will be 61.5 billion cubic meters, an increase of 23.4%; chemical gas From rise to fall, the gas consumption was 25 billion cubic meters, a decrease of 5.1%.
Consumption in the central and eastern regions has grown rapidly, while growth in the western region has been slower. In 2018, natural gas consumption in Hebei, Jiangsu, Guangdong and other provinces showed a gradual increase, with annual increases exceeding 3 billion cubic meters. In terms of regions, consumption in the Bohai Rim region was 59 billion cubic meters, much higher than in other regions, with a growth rate of 22.9%; consumption in the Yangtze River Delta region was 48 billion cubic meters, a year-on-year increase of 20.0%; and consumption in Central and South China was 290 100 million cubic meters, with a growth rate of 19.3%; the growth rates of natural gas consumption in the southeast coast, northeast, southwest, and central and western regions were 16.7%, 16.3%, 12.1%, and 11.2%; the growth of natural gas consumption in the northwest region was slower and the growth rate was 6.7%.
Analysis of China's natural gas supply
Domestic natural gas production has steadily increased. In 2018, it is estimated that the natural gas production for the whole year was 157.3 billion cubic meters (excluding coal-bed methane from local enterprises), a year-on-year increase of 6.7%, which was much lower than the growth rate of consumption. Among them, coal-to-gas production was 2.3 billion cubic meters, an increase of 4.5% year-on-year; coal-bed gas production was 5 billion cubic meters, an increase of 6.7% year-on-year; shale gas production exceeded 11 billion cubic meters, an increase of 22.2% year-on-year.
Natural gas imports have grown significantly, and foreign dependence has risen sharply. China's natural gas imports continue to grow at a rapid rate, surpassing Japan in 2018 to become the world's largest natural gas importer. It is estimated that the natural gas import volume for the whole year was 125.4 billion cubic meters, an increase of 31.7% year-on-year, higher than the 24.7% in 2017, and its external dependence increased to 45.3%.
Pipeline gas imports have increased rapidly. It is estimated that the volume of pipeline gas imports for the year is 52 billion cubic meters, an increase of 20.6% year-on-year. The increase mainly comes from Kazakhstan and Uzbekistan. The gas imports from the two countries accounted for 25% of China's pipeline gas imports, an increase of 15 percentage points from the previous year .
LNG imports have grown rapidly. Affected by factors such as increased market demand, the commissioning of new LNG receiving stations, and the entry of a new LNG contract into the window period, it is estimated that the annual LNG import volume will be 54 million tons, a year-on-year increase of 41.1%.
Suppliers signed a number of import and sales contracts for imported LNG. In 2018, PetroChina signed LNG import contracts with Chenier, Qatar LNG and ExxonMobil. CNOOC and Malaysia Petroleum Liquefied Natural Gas Company signed an LNG import contract. In addition, CNOOC's early LNG contract with BP will be fulfilled in 2019, and the number of new LNG contracts will exceed 10 million tons per year.
Natural gas market supply and demand are tight, seasonal supply and demand tensions ease. In 2018, China's natural gas supply increased rapidly, but the market demand grew faster than expected, and the overall supply of resources was tight throughout the year. The annual supply is estimated at 282.7 billion cubic meters, a year-on-year increase of 16.4%. Seasonal supply and demand tensions in the natural gas market have eased.
Analysis of China's natural gas prices
The pace of marketization of natural gas prices has accelerated. The government adheres to the principle of "holding the middle and letting go of both sides", has issued a number of policies to accelerate the marketization process of natural gas prices, and strengthened the supervision of pipeline transportation and gas distribution prices in the province. Guangdong, Guangxi, Ningxia, Shanxi and other provinces have lowered their urban pipeline networks. Gas distribution fees. In May, the National Development and Reform Commission issued the "Notice on Rationalizing the Prices of Resident Valve Stations", implemented the harmonization of prices of residential and non-resident valve stations, and developed a linkage mechanism for upstream and downstream natural gas prices, allowing the prices of residential valve stations to rise after one year. The proportion of upwards does not exceed 20%.
Adjust end-use gas prices in many places and implement upstream and downstream price linkage mechanisms. According to the State's "Notice on Streamlining the Prices of Residents 'Valve Stations", local governments have strengthened price transmission and adjusted terminal prices based on factors such as residents' affordability and the operating status of gas companies. At present, Beijing, Tianjin, Shenyang and other places have raised residential terminal gas prices and implemented upstream and downstream price linkage mechanisms.
The average price of natural gas imports rose sharply. In 2018, China's imported natural gas prices rose sharply. From January to November, the average CIF price of imported LNG was 2.19 yuan / cubic meter, a year-on-year increase of 19.2%, and the customs value was 2.46 yuan / cubic meter; the average CIF price of imported pipeline gas was 1.49 yuan / cubic meter, a year-on-year increase of 9.7%. The tax-paid value is 1.65 yuan / cubic meter.
The Shanghai-Chongqing Trading Center has developed rapidly and innovated trading methods. In 2018, the Shanghai Petroleum and Natural Gas Trading Center launched window trading of LNG receiving stations to help China's natural gas marketization reform. As of the end of December, the unilateral transaction volume of pipeline gas was 24 billion cubic meters, with an average price of 2.06 yuan / cubic meter; the LNG transaction volume was 2.28 million tons, with an average price of 4752 yuan / ton.
Chongqing Petroleum and Natural Gas Trading Center officially started trading in May. As of the end of December, the unilateral trading volume of pipeline gas was 6.3 billion cubic meters, with an average price of 2.12 yuan / cubic meter; the LNG trading volume was 38,000 tons, with an average price of 3797 yuan / ton.
Development Status of Natural Gas Storage and Transportation in China
Pipeline construction is progressing steadily. At the end of 2018, the total mileage of China's natural gas long-distance pipeline was nearly 76,000 kilometers. Phase 1 of the E'ancang Gas Pipeline, Phase 1 of the Mengxi Pipeline, and the Chuxiong-Panzhihua Natural Gas Pipeline of the China-Myanmar Pipeline Branch Line have been put into operation. In addition, the China-Russia Eastern Line and Qianjiang-Shaoguan Natural Gas Pipeline have been partially completed. The main pipeline is 1,540 kilometers. In addition, the Nanchuan Shuijiang-Fuling Baitao National Key Natural Gas Pipeline Project has begun construction and is scheduled to be put into operation in October 2019. After completion, it will be favorable for the Fuling shale gas export. Regional pipeline network construction continued to advance, and six natural gas pipeline network projects in eastern Guangdong, western Guangdong, and northern Guangdong started in Guangdong natural gas pipeline network, and are planned to be completed by the end of 2020.
The LNG receiving station has been put into operation. As of the end of 2018, China's total LNG receiving station capacity reached 66.95 million tons / year. There are 7 LNG receiving stations under construction in China, with a receiving capacity of 16.2 million tons per year. In addition, Tangshan, Qingdao, Rudong, and other LNG receiving stations have started expansion projects, and their receiving capacity will be significantly improved after being put into production.
The working gas volume of gas storage has increased significantly, and multiple gas storage projects are ready to start. In 2018, the capacity expansion of China's built gas storages has been steadily progressing. The first domestic gas storage in China, Ganghua Gas Jintan Gas Storage, has been commissioned. Wen 23 gas storage was initially completed. As of the end of 2018, China has built a total of 26 underground gas storages with peak capacity of 13 billion cubic meters.
The natural gas infrastructure interconnection project progressed smoothly. In February 2018, the National Development and Reform Commission issued the "Notice on Accelerating the Advancement of Key Projects for Natural Gas Infrastructure Interconnection in 2018" and deployed ten major interconnection projects. By the end of 2018, CNOOC Mengxi Pipeline Phase I and Tianjin Pipe Network, PetroChina Dagang Oilfield Coastal Substation and Sinopec Tianjin LNG Terminal, China-Myanmar Pipeline and Beihai LNG Terminal have been completed and put into operation. The Sichuan-to-East Gas Pipeline and the West-to-East Gas Pipeline will soon be put into operation. The new Olympiad Zhoushan LNG terminal and the Zhejiang Province pipeline network are expected to be completed in 2019.
Looking forward to the rapid growth of domestic natural gas demand in 2019
Demand continues to grow rapidly, and the growth rate will fall. In 2019, the domestic natural gas market continues to develop rapidly. The national natural gas consumption is expected to be 308 billion cubic meters, a year-on-year increase of 11.4%.
Urban gas and industrial gas maintained rapid growth. In 2019, it is expected that urban gas will continue its rapid growth trend, with a year-on-year increase of 12.1% to 111 billion cubic meters. In the gas consumption structure, urban gas accounts for 36.0%, industrial fuel accounts for 33.8%, power generation gas accounts for 21.9%, and chemical gas accounts for 8.3%.
Natural gas production has steadily increased and imports have maintained a high growth rate
Domestic natural gas production has grown steadily. Suppliers actively increase domestic exploration and development investment and increase exploration and development efforts. In 2019, domestic natural gas production will increase steadily, and shale gas production will maintain a rapid growth rate. It is estimated that domestic natural gas production (including coal-to-gas) will be 170.8 billion cubic meters, an increase of 8.6% year-on-year, accounting for 53.5% of the supply structure. It is expected that the supply and demand of China's natural gas market will be tightly balanced throughout the year. The country will continue to promote the construction of a gas storage peak shaving system and the seasonal supply and demand contradiction will continue to improve.
Import volume maintained rapid growth. In 2019, the third phase of CNOOC Tianjin LNG Terminal, CNOOC Fangchenggang LNG Terminal, Tangshan and Putian Fujian LNG Terminals will be put into operation, and China's LNG receiving capacity will reach 75.55 million tons / year. Some of the newly signed LNG import contracts have begun to perform, and the LNG spot import volume has declined, and the total LNG import volume has maintained a high growth rate. The China-Russia Eastern Line is put into operation, and the increase in pipeline gas imports from Kazakhstan will drive a steady increase in pipeline gas imports. It is estimated that the natural gas import volume for the year will be 143 billion cubic meters, an increase of 14.0% year-on-year, and the external dependence will be 46.4%. In terms of imported gas prices, the prices of imported pipeline gas and imported LNG are expected to decrease slightly in 2019.