Industrial demand key factor in natural gas shortage

Surging demand in industrial sectors has been the main force behind the natural gas shortage in China, and an unexpected decrease in planned supply has worsened the situation, according to a top academic.

In addition, almost 3.2 million households and some central heating generators in 28 cities and regions surrounding Beijing have switched from coal to gas this year, said Yao Qiang, former dean of Tsinghua University's Department of Thermal Engineering.

In December, daily natural gas consumption increased by 130 million cubic meters year-on-year to 800 million, and the energy shift to gas contributed only 30 percent of the newly added demand, he said.

Industrial consumption is the main contributor to the demand surge, which "has been driven up by the strong growth of Chinese economy", Yao, now dean of Tsinghua's postgraduate school, said in a Q&A that the Ministry of Environmental Protection published over the weekend.

Total natural gas consumption from January to October was 186.5 billion cubic meters, up by 18.7 percent year-on-year. The consumption for electricity generation saw the highest increase of 27.5 percent, while growth in chemical engineering sector stood at about 18 percent, he said.

The supply has not increased as planned, making the situation worse. A liquefied natural gas receiving terminal of China Petroleum and Chemical Corp, also known as Sinopec, in Tianjin was not put into operation this year as planned. The daily supply from Central Asia is aslo 40 to 50 million cubic meters short of the contracted amount, Yao said.

"Without these supply side problems, the increased demand from the shift to gas could completely be met," he said.

An action plan released by the Ministry of Environmental Protection in August set goals to replace coal by the end of October with clean energy fuel for heating in 3 million households－in 28 cities in six provincial regions around the capital, including Shanxi and Hebei－to curb air pollution.

That shift delayed heating, leaving many households and schools without heat because of unfinished projects or gas shortages, although the heating supply has been normal in most areas.

To ease the shortage, Guangdong Natural Gas Grid Co began on Saturday to transport 7.25 million cubic meters of natural gas daily from Guangdong province to northern China.

Wu Qingbiao, honorary president of the Guangdong Oil and Gas Association, said gas transportation to Shenzhen and Hong Kong can be guaranteed, and gas prices will remain stable, thanks to ample gas sources from western China, seas and imports.

Xinhua contributed to this story.