Nation's natural gas industry set for strong growth

China's natural gas industry will continue to grow rapidly until 2025 with clean energy-driven power generation showing increasing importance, bringing opportunities to both foreign and domestic companies.

As the economy grows and the government carries out policies to raise clean energy use, China's natural gas demand will increase at an annual rate of 8 percent, reaching almost 400 billion cubic meters a year by 2025, when the market will become 2.5 times larger than it is today, says an industrial white paper titled China's Age of Gas, issued on Oct 21 by General Electric Co, a US multinational conglomerate.

It says China's share of gas in the primary energy consumption mixture is expected to double to 8 percent in 2025 and non-hydrocarbon resources are expected to grow to 17 percent of primary energy.

By then, natural gas will account for about 26 percent of the global energy supply and China's natural gas demand growth will contribute 20 percent to global growth by 2025.

"During China's natural gas development, GE can contribute from four sectors including exploration, technology, transportation and distributed power generation," says Jeffrey Immelt, chairman of the board and chief executive officer of the company.

China is always an important market for GE, and the company would like to share the advanced technology that the company owns with its Chinese partners in the energy sector, he says.

As air pollution has become a serious issue in China, the government has been working on reducing carbon emissions and enforcing stricter standards for industrial sectors in terms on emissions during and after production, which has brought opportunities to distributed power generation programs that the government encourages.

China's annual electricity demand is expected to double by 2025, from about 4,200 terawatt hours today. About half of the new electricity supply in China comes from coal power, and the rest will come from gas and all other generation sources, says the white paper.

Compared with 75 percent of electricity generated from coal-fired power plants at present, it will be a more diversified electricity outlook than that during the last decade.

GE believes the annual natural gas share of China's power market will triple by 2025, reaching 6 percent of the total generation, and natural gas demand in the power sector will increase to 117 billion cubic meters, representing 30 percent of total demand in 2025.

This may explain why GE formed a joint venture with Huadian Corp, one of the country's top five power generators, in 2011, investing in equipment, technology and services for the distributed power generation business.

The company said it will support China's plan for more than 1,000 distributed energy combined heat and power plants by 2015.

Although China's natural gas industry needs to embrace a future with soaring demand, consumption and investment, Immelt says there are also challenges for the country the biggest one being pricing.

"Natural gas prices are artificially low, which has not created enough incentives for technology innovation in the industry," Immelt says.

dujuan@chinadaily.com.cn