Blue skies in China will be a global gas producer’s best friend

SINGAPORE: Chinese President Xi Jinping’s push to clear his nation’s notorious smog will drive global natural gas demand into next decade, according to the International Energy Agency (IEA).

The world’s largest energy user will boost consumption of the fuel by 8% a year from 2017 to 2023, a total increase of 139 billion cubic meters and accounting for more than one-third of global demand growth, the IEA said in its annual gas market report.

Almost 60% of that incremental demand will come from the industrial and residential sectors, which have been pushed by the government to use more natural gas in place of coal.

“Every sector contributed to the gas surge, but the main factor was the switch from small coal-fired to natural gas-fired boilers for industrial and residential use,” the agency said in its report.

The China-driven global demand boom may lead to a stretched liquefied natural gas market next decade if no new investments are made in production, the IEA warned.

Sellers need to make decisions to pursue projects in the next few years to ensure adequate supply by 2023, it said.

China’s gas use rose 15% last year as the government passed a series of measures to help meet a deadline set in 2013 for ambitious air quality targets.

While the increased gas had some impact on airborne pollution in Beijing, it also created shortages in parts of the country that lacked adequate storage or supply access.

The IEA expects strong air-quality policies to continue driving China’s demand, though at a slower rate than last year, toward the country becoming the largest importer of natural gas by 2019.

It might have already reached that milestone, with recent data showing the nation overtook Japan as the biggest buyer during the first five months of 2018.