CNPC to prioritize natural gas over next five years

CNPC technicians check natural gas facilities in Yinchuan, capital of the Ningxia Hui autonomous region. [Photo/Xinhua]

Asia's largest oil and gas producer China National Petroleum Corp is betting big on natural gas, aiming to boost both its supplies and transportation capacity in the next five years.

The State-owned company, which provides more than two-thirds of the country's natural gas, plans to sell in excess of 750 billion cubic meters of the fuel between now and 2020, a 40 percent increase on the past five years, said Zhao Zhongxun, deputy-director of CNPC's planning department.

"Our top priority is to boost domestic supplies of natural gas, then adjust imports based on demand, and at the same time expand our pipeline network and capacity of LNG terminals," he said, detailing the energy giant's new five-year plan for natural gas, during a "green development" forum held in Beijing.

That blueprint suggests that by 2020, the company's pipeline network is expected to exceed 60,000 kilometers with an annual transport capacity of 180 billion cu m.

Also planned are 12 more gas-storage sites, with the receiving capacity of its three liquefied natural gas terminals expanding from 13 million tons to 19 million tons.

Oil majors have all cut their spending on future projects as plummeting crude oil prices have slashed their profits, but CNPC will secure the production of natural gas and keep exploration, a source told China Daily, without giving further details on the budget on natural gas.

CNPC spokesman Qu Guangxue said there will be greater promotion of gas-fired power plants and the use of natural-gas-powered vehicles.

CNPC imports a third of its natural gas from major countries in Central Asia such as Kazakhstan and Turkmenistan, and Zhao explained it will start imports from Russia in 2019 on completion of the Chinese section of Sino-Russia pipeline.

PetroChina, CNPC's listed unit, posted its first-ever quarterly loss in April amid falling global crude prices and shrinking domestic demand.

Its profit on natural gas and pipelines slumped nearly 36 percent to 4. 7 billion yuan in the first four months of 2016.

Zhao said during the first three years of its 12th Five-Year Plan (2010-15), the company grew its natural gas supplies 13 percent.

But demand for the fuel shrunk last year from many industrial sectors including smelting, construction, and glass production.

Analysts expect gas prices to rebound slightly over the coming years, as a result of the government's policy to encourage cleaner energy to combat air pollution.

"Natural gas is a practical choice for China," said Gao Jian, a senior analyst at commodities consultancy Sublime China Information Co Ltd, "as the country increases its share of non-fossil fuel in its energy mix, and relies more on alternatives."

Natural gas' share in the country's total primary energy mix will be raised to above 10 percent by 2020, double the current level, he said.