Driven by strong market demand, China's natural gas production has grown rapidly in recent years, with an average annual growth rate of 7.8% and reaching 157.5 bcm in 2018; however, consumption growth rate is more than twice that of production, and the increment volume of consumption is more than three times that of production.

Since production has not been able to grow as fast as consumption, China’s natural gas imports have been rising rapidly in recent years. China imported a total of 124.7 bcm of natural gas in 2018, a y-o-y increase of 31.9%. The astonishing increases in natural gas demand in 2017 and 2018 have been policy driven, due to stronger environmental policies and the switching from coal to gas.

In 2017, China became the second-largest importer of LNG after Japan, marking a record for China's import growth, with imports of 52.6 bcm. In 2017, LNG was mainly imported from Australia at 46%, followed by Qatar at about 20%, and Malaysia at 10%. In 2018, LNG imports reached 73bcm, with 44% imported from Australia, 17% from Qatar, 10% from Malaysia, and 9% from Indonesia.

Pipeline gas imports grew by 19% in 2018 to reach 50.4 billion cubic metres (Figure 4). According to the General Administration of Customs, of China’s pipeline gas imports from January to November 2018, 69% was imported from Turkmenistan, 13% from Uzbekistan, 12% from Kazakhstan, and 6% from Myanmar (NBS, 2018).

Figure 4. China's natural gas imports, 2006-18

Source: Data for 2006-16 from China Energy Statistical Yearbooks of the National Bureau of Statistics; data for 2017 from the customs information network.

China’s gas imports are growing fast, especially LNG imports, which have significantly exceeded pipeline imports.

Infrastructure development

Gas storage

As of the end of 2018, China had 12 underground gas storage facilities in operation, with an effective working gas capacity of 8.8 bcm. This represents less than 4% of the annual gas consumption volume. Compared with the scale of consumption, China’s storage capacity is much lower than in other major countries.