China CBM output, LNG imports up

Sino Gas & Energy Holdings on Wednesday announced that coal-bed methane production from its fields had increased. The rise in production is in keeping with China’s rising energy demand, which is even more palpable during the winter months.

Coal-bed methane production rose at the Linxing and Sanjiaobei assets, located in China’s Shanxi province. Output now stands at around 453,120 cubic metres (16 mcf) of natural gas per day. However, production is expected to increase to 708,000 cubic metres (25 mcf) in the next several weeks. Sino Gas & Energy, an Australian hydrocarbons firm, serves as the fields’ operator.

November 2016 also saw China’s natural gas imports increase 47% compared to 2015. While the winter has been relatively mild thus far, operators are making purchases in anticipation harsher conditions. The rise in the use of natural gas is the result of numerous variables, not the least of which are environmental concerns and financial incentives.

China’s shift to a more gas-based energy mix is evident in recent policy shifts. In 2014, the National Development and Reform Commission (NDRC) encouraged the private sector to get involved in the country’s LNG infrastructure and import market by issuing access guidelines to existing state-owned LNG infrastructure. Several LNG long-term supply contracts were signed by the Chinese major NOCs during high oil prices. As a result, private companies have capitalised on the decline in oil prices by importing spot LNG cargo and utilising the NOCs infrastructure to supply the country.

ENN Energy is constructing the country’s first privately owned LNG import terminal in Zhoushan, Zhejiang, which will will process 3 million tpy. The project was initially scheduled for completion by the end 2016, but is rescheduled to start in 2017-2018 due to delays. State-owned companies such as Sinopec and CNOOC are involved in the LNG market through the ownership and operation of LNG terminals.