China Launches New Gas Pipeline Amid Soaring Demand

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By Tsvetana Paraskova, Oilprice.com

China has put into operation the Zhongwei-Jingbian gas pipeline as part of its West-East gas transmission project, while domestic natural gas demand soars with the government push to have millions of households switch from coal to gas in an effort to combat pollution.

The newly operational pipeline is 377-km-long (234 miles) and has a designed annual capacity of 30 billion cubic meters of gas, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) said on Tuesday.

The pipeline will supply gas from Central Asia and the province of Xinjiang to the northern part of China, which has seen gas supply shortages recently with the cold spell in the country and the growing transition to gas from coal.

On Monday, China’s state planning commission ordered eight Chinese regions to “regulate” surging gas prices amid winter heating demand and the switch to gas from coal, by meeting with natural gas producers, LNG terminal operators, and traders.

Ahead of the winter season, China has been buying up LNG cargoes on the spot market, pushing spot prices higher than the prices of the oil-indexed LNG cargos in the long-term delivery contracts.

China is expected to become the leading determinant in global natural gas demand in the future.

The International Energy Agency (IEA) has recently estimated that global gas demand would grow by 1.6 percent annually until 2022, with China making up 40 percent of this growth.

Consumption in China is expected to increase to almost 340 bcm by 2022, of which imports will account for 140 bcm, up from 70 bcm last year, according to IEA’s Gas 2017 report. In addition, China’s domestic production is seen growing by around 65 bcm to 200 bcm by 2022, with annual growth of 6.6 percent, which would make the country the world’s fourth-largest natural gas producer by 2022.

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