Transport fuels LNG growth
China predicted to use 45 billion cubic meters of gas by 2030
As China strives to convert to cleaner energy, its liquefied natural gas production capacity will soar in 2014, with higher profits supporting more projects. Fifty-five projects in the sector will be completed this year, which will bring the country’s total daily LNG production capacity beyond 60 million cubic meters, according to estimates from ICIS C1 Energy, a Shanghai- based energy consultancy.
LNG production capacity grew 51.2 percent to 38.35 million cu m a day last year, according to the consultancy.
Figures from the CNPC Economics and Technology Research Institute, which uses different calculation methods, show that China has 66 LNG projects in operation with a total capacity of 33.77 million cu m a day.
The figure will grow to more than 70 million cu m a day this year if all the projects under construction are completed, said the institute.
“Competition in the domestic LNG market is becoming more intense,” said the institute. “Participants in the market are diversified, with private, State-owned and foreign companies.”
According to the institute, private companies hold a 62.3 percent market share.
Rising profits are the major incentive for the expansion of LNG projects.
According to ICIS C1, the average LNG price last year exceeded 4,000 yuan ($ 659) a metric ton. The price peaked at 4,750 yuan a ton in November, or 1,021 yuan higher than a year earlier, according to the consultancy.
“Most LNG suppliers had better profits last year thanks to growing demand based on LNG consumption in the transportation sector,” said the consultancy.
LNG consumption is surging around the world because of increased restrictions on emissions.
Energy consulting firm Wood Mackenzie estimated in late January that global natural gas demand in the transport sector will grow from nearly 40 billion cu m in 2012 to more than 160 billion cu m in 2030.
“The most striking thing is the growth of LNG demand associated with the transport sector, increasing from less than 5 billion cu m in 2012 to more than 80 billion cu m in 2030 and increasing from less than 1 percent to some 10 percent of global LNG demand,” according to Wood Mackenzie.
“China will remain
the single largest market for gas in transport, with consumption of 45 billion cubic meters by 2030,” said Noel Tomnay, head of global gas research for Wood Mackenzie.
“Demand in China is being propelled by a combination of winning factors,” Tomnay said. That include strong vehicle market growth and financial support from regional governments.
These trends are driving up China’s LNG imports and the number of LNG receiving terminals in the country.
As of the end of 2013, China had 10 terminals in operation with an annual capacity of 32.3 million metric tons, according to ICIS C1. It forecast that the nation’s annual capacity will grow to 37.3 million tons in 2014, with two new terminals going into operation.
In 2013, China’s LNG imports rose 22.4 percent to 25 billion cu m, according to the CNPC institute.
In the downstream sector, China is building more LNG fueling stations because the number of LNG-powered vehicles is increasing.
According to ICIS C1, China will build more than 400 LNG stations this year and the country will have about 2,500 stations by yearend.
From 2009 to 2011, supply shortages and technology constraints limited the growth of LNG stations in China.
As the problems were resolved, the number of LNG stations more than doubled in 2012 and grew 130 percent in 2013.
Workers check pressure valves at a natural gas facility in Dalian, Liaoning province. In 2013, China’s LNG imports rose 22.4 percent to 25 billion cubic meters, according to the CNPC Economics and Technology Research Institute.