Context and status of the Chinese gas market liberalisation

Context and status of the Chinese gas market liberalisation

The People’s Republic of China (“China”) is at the forefront of the global natural gas growth trend. The country has enacted several reforms with the objective of liberalising its domestic prices. Gas market opening is also on the agenda of fast-growing markets throughout the world, with several reforms being enacted in major Asian consuming countries and supported by a background of positive trade with increasing liquidity and flexibility. This context provides the foundation for future consumption growth and market opening in fast-growing Asian markets, especially for China, which is expected to remain a leading contributor to global natural gas demand growth in the medium and longer terms.

General perspective

Fast-growing demand

China's natural gas consumption is rising rapidly. According to data from the National Development and Reform Commission (NDRC), the consumption of natural gas reached 280.3 billion cubic metres (bcm) in 2018, a year-on-year (y-o-y) increase of 18.1%. Since 2003, when consumption grew at over 16% (Figure 3), demand has maintained double-digit annual growth, except for a temporary slowdown in the growth rate from 2014 to 2016.

Figure 3. Natural gas production and consumption in China, 2009-18

Source: Data for 2009-16 from China Energy Statistical Yearbooks of the National Bureau of Statistics; data for 2017 from the Statistical Communiqué on the 2017 National Economic and Social Development of the National Bureau of Statistics; data for 2018 from the website of the National Bureau of Statistics.

China's natural gas consumption is rising faster than production.