China to Slow Domestic Gas Production Growth

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China’s National Energy Administration (NEA) has set a slower growth rate for domestic natural gas production in order to save market space for pipeline gas imports from Russia and LNG imports. Domestic demand growth this year might not be able to provide enough space for growth in both domestic production and imports. Pipeline gas imports from Russia have the top geopolitical priority, so China will ensure the growth of Russian gas imports (LNGI Apr.20'21). And emerging LNG buyers are keen to directly import cheaper LNG without the involvement of the three state-run gas majors, China National Petroleum Corp. (CNPC), Sinopec, China National Offshore Oil Corp. (CNOOC) (LNGI Apr.20'21). Without enough growth from domestic gas demand, the only solution is to reduce investment on domestic gas production and have a milder growth rate. But this will still mean growth for domestic gas production as that is a direct order from Chinese President Xi Jinping to ensure national energy security. The NEA expects China’s domestic gas production to be 202.5 Bcm (19.58 Bcf/d) this year, 7.2% higher than last year. China’s domestic gas production was 188.85 Bcm last year, with an annual growth rate of 9.8%, according to the National Bureau of Statistics.

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