Surge in China’s gas demand
2017 was a bumper year for natural gas, with consumption (3.0%, 96 bcm) and production (4.0%, 131 bcm) both increasing at their fastest rates since the immediate aftermath of the financial crises. The growth in consumption was led by Asia, with particularly strong growth in China (15.1%, 31 bcm), supported by increases in the Middle East (Iran 6.8%, 13 bcm) and Europe.
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| Source: EWA |
The growth in consumption was more than matched by increasing production, particularly in Russia (8.2%, 46 bcm), supported by Iran (10.5%, 21 bcm), Australia (18%, 17 bcm) and China (8.5%, 11 bcm).
Surge in China’s gas demand
The single biggest factor driving global gas consumption last year was the surge in Chinese gas demand, where consumption increased by over 15%, accounting for around a third of the global increase in gas consumption. Much of this rapid expansion can be traced back to the Environmental Action Plan announced in 2013, which set targets for improvements in air quality over the subsequent five years. With that five-year deadline looming, the Chinese authorities in the spring of last year announced an enhanced set of measures for Beijing, Tiajing and 26 other cities in the North-East provinces of China, designed to meet the environmental objectives.
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| Source: EWA |
These measures, which were further reinforced in the autumn of last year, were focussed on the use of coal outside of the power sector. In particular, a combination of very sizeable carrots and sticks were used to encourage industrial and residential users to switch away from coal to either gas or electricity, with the vast majority opting for gas. Although most attention has focused on the 3 million households affected by this policy, the biggest factor driving the expansion in gas demand was switching within the industrial sector. The resulting increase in gas demand was greatly compounded by the switch into gas reaching a peak just as winter heating demand was ramping up.
Chinese gas demand looks set to continue to increase strongly this year, but it seems unlikely that the extent of the surge in gas demand seen in China last year will be repeated in 2019 and beyond.
Analysis By: Spencer Dale, BP group chief economist
BP's Statistical Review 2018 round up.
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- ADNOC deploys pioneering AI-enabled process optimization technology
- Mexico Pacific announces long-term LNG SPA with POSCO International
- ONEOK to acquire Medallion and controlling interest in EnLink for $5.9 B
- Golar LNG signs EPC deal for $2.2-B MK II FLNG conversion project
- ONEOK to acquire Medallion and controlling interest in EnLink for $5.9 B
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Oman plans third LNG train, boosting domestic production to more than 15 MMtpy
- Brazil's fossil push undermines Lula's green ambitions
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