China rations domestic sales of LNG imports as winter bites

27 November 2013 04:42 Source:ICIS News

By Ricki Wang

China rations domestic sales of LNG imports as winter bitesSINGAPORE (ICIS)--China has started rationing spot sales of imported liquefied natural gas (LNG) in the domestic market as part of efforts to battle a gas supply shortage expected this winter season, industry sources said on Wednesday.

Residential users, which get their supply through pipelines, are top priority, they said.

This move goes hand in hand with the strategy of domestic gas suppliers such as PetroChina and China National Offshore Oil Corp (CNOOC) to increase their LNG imports to fill the projected 6.8 billion cubic metre (bcm) supply shortfall in northern China over the winter months of November to March, industry sources said.

Household gas consumption in the region typically spikes during this time of the year because of very cold weather.

The Tianjin and Beijing municipalities, as well as the Hebei and Shaanxi provinces will be affected by the projected shortfall, according to a source from local energy giant PetroChina.

In December, PetroChina is expected to receive five LNG cargoes into its Rudong terminal in Jiangsu province, against its monthly average of two cargoes in the first 10 months of 2013, a source at the operator of the terminal said.

At CNOOC’s Ningbo terminal in Zhejiang province, two LNG cargoes are due to arrive next month, a source at the terminal said.

Meanwhile, LNG imports received at three newly-commissioned terminals – at Zhuhai in Guangdong, at Tianjin and at Caofeidian in Hebei – would be devoted in full to residential end-users, with no volume to be made available to spot LNG  buyers.

Rationing gas supply has affected industrial users and chemical companies, industry sources said.

Hebei Cangzhou Dahua halted production at its urea and nitric acid plants from 12 November following a supply suspension of feedstock gas.

Operations of some gas liquefaction facilities were also affected, thus lowering LNG production.

China Natural Gas Corp has cut the run rate at its 300,000 cubic metre/day LNG plant at Dengkou in Inner Mongolia autonomous region to 66.7% on 25 November from 100% previously, a company source said.

Local oil and gas giant PetroChina has reduced piped gas supply to southwest China to guarantee supply to north China, cutting its daily natural gas supply via the Zhongwei-Guiyang gas pipeline to Sichuan province in southwest China by almost 10m cubic metres (mcm), a source close to the company said.

Another major supplier Sinopec, on the other hand, had pledged to supply 7.6bn cubic metres (cbm) of natural gas  during the winter months, representing a 10.5% year-on-year increase, with all its pipelines to be operated in full load.

($1 = €0.74 / $1 = CNY6.09)

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By Ricki Wang