The major oil and gas companies in China, the world's largest natural gas consumer, are increasing their overseas gas supply to ensure a steady supply of power this winter.
China Petroleum and Chemical Corp, also known as Sinopec and the world's largest refiner by volume, said it planned to purchase 13.3 billion cubic meters of liquefied natural gas from overseas during the upcoming heating season, which will be potentially colder than normal due to La Nina.
All of the company's LNG receiving terminals are working at full capacity, it said. The company is also pushing forward the second phase of its Tianjin LNG terminal construction, which will have a capacity of 486,000 cubic meters and be put into operation by November, it said.
China National Offshore Oil Corp, China's top offshore oil and gas driller, has also inked a long-term LNG purchase agreement with Qatar Petroleum. The company will purchase 3.5 million metric tons of LNG annually from Qatar Petroleum for 15 years, the longest LNG purchase agreement for a domestic company in eight years.
CNOOC made its first long-term LNG purchase agreement with Qatar Petroleum in 2008, agreeing to purchase 2 million tons of LNG per year for 25 years. It has imported more than 200 million tons of LNG since 2006, according to the company.
As the country's largest oil and gas company, China National Petroleum Corp is also negotiating with gas suppliers from abroad. It has recently received almost 100 million cubic meters of LNG through its Jiangsu LNG terminal, which will be transported to the Yangtze River Delta region.
Platts Analytics expects Chinese LNG imports to grow by 37 million cubic meters per day over the 2021-22 winter-spring period, compared to the last heating season.
The National Development and Reform Commission has asked the three State-owned oil and gas companies to ensure sufficient natural gas supply in the coming heating season.
China's heating season normally lasts from Nov 15 to March 15 in the northern regions.
According to the National Energy Administration, China saw robust market demand of natural gas this year and the country's total gas demand is expected to rise 11 percent to 13 percent year-on-year to 365-370 bcm, supported by the easing of COVID-19 restrictions and the strengthening of the economy.
In addition to the import of LNG, the companies are also stepping up construction of underground gas storage clusters.
Sinopec said this week that its biggest underground gas storage cluster, the Zhongyuan underground gas storage cluster located in northern China, was put into operation on Monday. With a total storage capacity of 10.03 billion cubic meters, it will be able to effectively meet upcoming winter fuel demand.
Underground gas storage construction in China has entered a new development stage after years of exploration. The commissioning of the underground gas storage cluster will further ensure gas supply security in the coming winter, said Li Ziyue, an analyst with BloombergNEF.
China's pipeline natural gas imports set a new record of 3.79 million tons in August, up 3.4 percent from the previous high of 3.67 million tons in July, according to the General Administration of Customs.
Platts Analytics expects China's total pipeline gas imports including volumes from Central Asia and Myanmar to average 162 million cubic meters per day between October 2021 and March 2022, up by 19 million cubic meters per day over the 2020-21 winter-spring level.