March 22, 2018 [The Business Times] - While China seeks more natural gas to meet booming demand from President Xi Jinping's clean-air drive, one part of the fuel's supply chain isn't growing fast enough to avoid a repeat of this winter's supply crunch.
Large, underground storage caverns are coming into focus as the missing link that the world’s biggest energy user needs to smooth out supply between weak consumption in the summer and surging demand in the winter.
While China has plans to more than triple storage capacity by the end of next decade, that still might not be enough to keep pace with its growing appetite, according to analysts at IHS Markit Ltd. and Wood Mackenize Ltd.
“Chronic gas supply tightness will continue to be around because storage capacity won’t be increasing to the point needed to deal with winter peaks,” Xizhou Zhou, an energy analyst with IHS Markit in Beijing, said by phone.
China National Petroleum Corp., the country’s biggest gas producer and importer, said last week that the country has storage space equivalent to about 3.3 per cent of total demand. That’s about 7.8 billion cubic meters, according to Bloomberg calculations.
The government plans to increase that storage capacity to 14.8 billion cubic meters by 2020, and more than 35 billion by 2030. That would amount to 4.8 per cent and 5.8 per cent of demand, based on forecasts from Sanford C. Bernstein & Co. The world average is 11.7 per cent, CNPC said.
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