Chinese demand for LNG likely to rise 48%

Beijing: China's demand for liquefied natural gas may increase 48 per cent in 2020 from an earlier forecast as the cleaner-burning fuel displaces oil, Wood Mackenzie Consultants said.

LNG consumption in 2020 may reach 46 million metric tonnes a year from a previous estimate of 31 million from end-2009, the Edinburgh-based energy consultants said in a report titled "Race for Supply - The Future of China's Gas Market."

"This strong demand growth will not purely be driven by gross domestic product," Gavin Thompson, China gas study director for Wood Mackenzie, said in an emailed statement yesterday. "The gas demand story is about displacing oil products, not coal, in the industrial and residential sectors."

China's economy expanded 10.3 per cent in the second quarter from a year earlier, down from 11.9 per cent the previous three months, after the government tempered credit expansion, investment spending and property speculation. The full-year expansion will be 10 per cent, according to the median forecast in a Bloomberg News survey of 20 economists on July 15.

Growth

The nation's gas demand may rise to 43 billion cubic feet a day (444 billion cubic metres) in 2030 from 9 billion cubic feet a day last year, with strongest growth prior to 2020, according to excerpts from the Wood Mackenzie report.

"This will expand the opportunity for LNG suppliers seeking to secure markets, particularly those in Australasia," Thompson said.

The world's biggest energy user may boost LNG purchases by about 65 per cent this year from imports of 5.5 million tons in 2009, according to Facts Global Energy in a July 22 report. Imports in June rose by 58 per cent from a year earlier to 741,732 tons, according to customs data from China. Purchases of the fuel reached a record 842,697 tons in April.

Production of unconventional gas, lodged in rocks and coalfields, may exceed 11 billion cubic feet a day in China by 2030, accounting for more than a quarter of total gas supply, Thompson said.