The main shale production region is the Sichuan oil and gas basin located in the namesake province in central China. Its development was among the key drivers of the national gas industry: according to Energy Institute, gas production in PRC grew more than 90% between 2013 and 2023. In absolute terms, the annual increment was 112 bn m3, comparable to annual gas consumption in Canada.
However gas imports to China were growing even faster: from 2013 to 2023, liquefied natural gas (LNG) imports went up by 72.7 bn m3 per year and pipeline gas, by 35 bn m3 per year. Las year, LNG accounted for 39% (61.3 bn m3) and pipeline gas, for 61% (97.8 bn m3) of the country’s total gas imports. This outrunning import growth is attributed to a skyrocketing demand from the power and residential sectors. According to Global Energy Monitor, China commissioned a total of 96 gigawatts (GW) of gas-fired thermal power capacity in 2013-2023, adding an average of 9.9% per year to the country’s gas-based power generation output.
Residential and services gas consumption increased two and a half times between 2014 and 2023, from 37 bn m3 per year to 95 bn m3 per year (rounded values), EIA reports. The surge in demand was triggered by urbanization, among other factors: in 2014 urban residents accounted for 54% of the country’s total population, and in 2023 the share was as high as 65%. Over the last few years, the demand was driven, in particular, by the nitrogen fertilizer industry for which natural gas is the primary input: between 2018 and 2022, fertilizer output in China grew 11% (to 38.2 mln tons, according to Statista).
In the near term, China’s gas import and consumption trends will be affected by incremental gas supplies via the Power of Siberia pipeline, expected to reach the contracted annual volume of 38 bn m3 (from 21.3 bn m3 in 2023, according to Energy Institute). Another key factor will be the development of domestic gas power industry: Global Energy Monitor estimates that as of August 2024, China was in the process of constructing 48 GW of thermal power projects (in addition to the currently operational 139 GW). On the other hand, demand growth will be constrained by the buildup of wind and solar generation capacity, China being the undisputed world leader in terms of commissioning rates.
