Nation expanding natural gas storage facilities as global prices fall

The construction of the first natural gas storage complex in western China recently began, with total investment set to reach 7 billion yuan ($990 million). The project will help promote the country’s natural gas storage capacity to ensure energy security, according to analysts.

The complex includes three storage tanks in Shanshan County, Northwest China’s Xinjiang Uygur Autonomous Region, China National Petroleum Corp said on Sunday.

It said the designed natural gas storage capacity is 5.6 billion cubic meters, with load level reaching 2 billion cubic meters.

Natural gas storage facilities – similar to grain warehouses – are used to store excess gas during periods of low demand and supplement market supply during high demand. This is also called load leveling.

The move is the implementation of the country’s energy reserve security strategy, especially given plunging global oil and gas prices, Jin Lei, an associate professor at the Beijingbased China University of Petroleum, told the Global Times on Monday.

Amid the global pandemic, international gas and oil prices have dipped, with that of liquified natural gas (LNG) below $2.56 per British thermal units – the price for an equivalent amount of Australian coal at the end of March, the Wall Street Journal reported.

“China’s oil and gas reserve capacity can cover about 90 days of use but that’s far behind the US and Japan, which have capacity of half a year to 200 days,” he said.

China has built 27 natural gas tanks but its load leveling capacity stood at a little more than 12 billion cubic meters, accounting for less than 4 percent of the country’s annual natural gas consumption, media reports said. That’s far below the international standard of 12-15 percent.