The increase in gas demand in 2019 in China will require a better integration of end-users

SINGAPORE (Reuters) – China's growing demand for natural gas in 2019 will require more efforts to better connect end-users to suppliers, as government policies and a recent tax cut will continue to boost consumer spending. clean fuel, said a senior manager of the industry.

China's gas demand will increase by 30 billion to 40 billion cubic meters this year, said Li Yalan, president of Beijing Gas Group, the main supplier of the Chinese capital, in an interview on Friday.

This would represent an increase of nearly 14 percent from the 280.3 billion m3 of gas China consumes in 2018, according to data from the national economic planner, the Commission for Development and Reform (NRC). Gas consumption in 2018 was 18% higher than 2017, the NDRC said.

The growing demand for gas is the result of the Chinese government's continued policies to replace coal with coal for heating and industrial uses. The industrial sector is buying more gas as a result of value-added tax cuts that came into effect on April 1, she said.

"The general direction will not change, which is to restructure the energy mix by increasing the share of natural gas," Li told Reuters during a phone interview.

"What China needs to do is connect the supply of gas with demand to ensure smooth switching."

Better planning by the state to provide grid connections and encourage energy companies to increase their imports has helped the Chinese gas market, the world's third largest market, to grow by 43 billion cubic meters last year. said Li.

This expansion occurred after a tightening of supply in the winter of 2017/18, as suppliers struggled to meet the demand for gas resulting from the policy of moving millions of households to coal and a harsh winter.

"This year, we will probably see the market growing between 30 and 40 billion cubic meters, which is a normal range," Li said.

While domestic gas production growth is constrained by high development costs and the new gas channeled from Russia's Siberian deposits will start only towards the end of the year, China should increase its imports of natural gas liquefied (LNG), said Li.

China, the world's second largest buyer of LNG since 2017, has increased its imports by 41% in 2018 to 54 million tonnes.

Beijing, one of the world's largest gas-consuming cities, consumed a record 18.5 billion cubic meters of gas compared to 2017, up 14 percent from 2017.

Gas use could also increase after the government reduces the value-added tax levied on manufacturers, as local authorities prepare to implement fuel price cuts for industrial and commercial users, Li said. .