China gas demand to surge through 2035, coal to still offer tough competition - PetroChina VP
By Chen Aizhu
SINGAPORE, Oct 30 (Reuters) - China's natural gas demand is expected to rise by more than 300 billion cubic metres (bcm) between 2018 and 2035, or 30% of global volume growth, stoked by the country's push to shift to the cleaner fuel from coal, a senior executive of PetroChina 601857.SS, 0857.HK said on Wednesday.
But despite the huge growth potential, natural gas still faces stiff competition from coal as a fuel for power generation and heating as China advances low-emission, or so-called "clean-coal" technology, said Ling Xiao, a vice president of China's top oil and gas producer, addressing an industry gathering in Singapore.
Meeting part of that demand surge, gas from Russia's Siberia fields is due to start arriving at the Chinese border from December. That supply, however, is more costly than the domestic wholesale benchmark, meaning PetroChina as the contractual buyer of the gas will incur losses in marketing the fuel, said Ling.
"It's slightly cheaper than central Asian gas but PetroChina will still be making a loss as it (the price) exceeds that of domestic city-gate benchmark rates," Ling told Reuters, speaking separately on the sidelines of the Singapore International Energy Week.
Russian gas giant Gazprom will supply China about 5 bcm of gas for 2020, via the landmark 'Power of Siberia' project, but the full ramp-up to the designed annual capacity of 38 bcm will depend on the cost of gas and how affordable that is to Chinese consumers.
China consumed 280 bcm of gas last year, making up 7.4% of the world's total demand, Ling said.
PetroChina is due to publish its third-quarter earnings later on Wednesday.
(Reporting by Chen Aizhu; Editing by Kenneth Maxwell)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.