19 September 2012 05:49 [Source: ICIS news]
(recasts for clarity)
By Jane Han
Chinese firms in the natural gas industry have been enthusiastic about building LNG plants in the past two years amid bullish expectations for the LNG market, they added.
These companies are expected to start up new LNG plants with a combined capacity of 87.4m cubic metres (cbm)/day by 2014, bringing the country’s total production capacity to 101m cbm/day, according to data compiled by ICIS C1 Energy.
The capacity of
The growth rate of LNG capacity expansion is expected to slow down but remain high at over 43% in the period of 2013-2014, according to market sources.
Many investors are willing to build LNG plants as they hold a positive outlook for the development of LNG as vehicle fuels, according to sources from several LNG producers.
However, LNG consumption by industrial consumers, households and power plants is likely to decline as a result of rising piped gas competition which is cheaper, according to market sources.
Some former LNG consumers such as gas-fuelled power plants, industrial consumers and city gas companies in south
Shenzhen Baochang Electric Power’s monthly LNG purchases topped 10,000 tonnes in the peak season last year but it stopped buying LNG from May this year.
“Vehicle fuel makes up no more than 30% of LNG consumption in
However, the rate of development of using LNG as vehicle fuel is rather low in
Many operators of LNG-refuelling stations found it hard to maintain their business because of a lack of LNG-fuelled vehicles on the road, the trader added.
“[Therefore], it’s hard to predict the rise in LNG consumption by automobiles in the long run,” said the trader.
In addition, LNG plants may not be able to find enough supply of gas feedstock, according to market sources.
82 LNG plants are currently under construction or are scheduled to come on stream in 2014. 28 of these plants, with a combined capacity of 28.8m cbm/day, will consume feedstock gas supplied by PetroChina’s Changqing Oilfield, ICIS C1 data showed.
However, PetroChina, the country’s largest gas producer and sole piped gas importer, have started to adopt stricter policies on granting gas supply contracts to LNG producers from July this year, a company source said.
Prior to July 2012, LNG producers could get feedstock gas through supply and purchase agreements with PetroChina’s subsidiary oil and gas companies.
However, after July, these producers have to apply to PetroChina directly for the feedstock, which makes it more difficult and time-consuming in acquiring gas supply, the PetroChina source added.
Some LNG producers, with new units planned or under construction, have not obtained feedstock gas supply contracts yet, a LNG supplier based in northern
Companies which have signed gas supply contracts may also suffer from feedstock shortage after starting up their units, as upstream gas suppliers may reduce or halt supplies to LNG producers if piped gas supply falls short in winter in order to guarantee household consumption, the supplier added.
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