CNPC to prioritize gas in pipeline for future

Analysts expect prices to rebound slightly in coming years as a result of the government's policy to encourage cleaner energy

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, says 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 says, 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 cubic meters.

Also planned are 12 more gas storage sites, with the receiving capacity of its three liquefied natural gas terminals expanding from 13 million 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 maintain its exploration, a source told China Daily, without giving further details on the budget for natural gas.

CNPC spokesman Qu Guangxue says 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 says it will begin imports from Russia in 2019 on completion of the Chinese section of Sino-Russia pipeline.

PetroChina, CNPC's listed unit, posted its first 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 ($714 million; 640 million euros) in the first four months of 2016.

Zhao says 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," says Gao Jian, a senior analyst at commodities consultancy Sublime China Information Co Ltd, "as the country increases its share of nonfossil fuel in its energy mix, and relies more on alternatives."

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

lyuchang@chinadaily.com.cn