NDRC Warned a Steeper Peak in Next Winter Heating Season

NDRC, China’s top economy planning authority, and NEA, NDRC’s subordinate agency, jointly held a press conference to issue the Opinion to Promote Natural Gas Storage Construction and Improve Peak-Shaving Capacity (short for the Opinion) on April 27, 2018. The Opinion clearly mandates the gas storage capacity by every levels of gas operators, and it also mentions that non-compliance operators’ gas operating licenses will be terminated. Besides, NDRC also estimates that the peak-shaving demand for natural gas in the next winter heating season will be steeper than the previous one which already met a supply shortage.

The Opinion stipulates that the gas operators (CNPC, CNOOC and Sinopec) shall retain the basic storage capacity over 10% of the contractual sales volume, the city gas companies shall retain over 5% of the annual consumption volume, and local governments shall retain the emergency gas storage no less than 3-day average consumption volume of the administrative area. The deadline of the fault accountable system is 2020.

According to SCI, China’s natural gas storage system can be divided into four parts: the pipeline system, the underground reserves, the tanks at receiving terminals and the tanks in the distribution system. China’s underground reserves only reached 10 bcm by the end of 2017, and the tanks at receiving terminals only totaled at 4.5 bcm. The regular natural gas reserve capacity was only 6% of the annual consumption (14.5 bcm of 239.5 bcm), which is far behind the requirement of the natural gas industry and peak-shaving demand in winter.

Actually, China’s three NOCs have initiated the storage expansion already. CNPC, China’s largest gas pipeline operator, announced to newly build 15 underground reserve depots and expand 8 depots out of its existing 23 depots. Sinopec also planned to triple its receiving capacity in five years, also involving the tank storage capacity. CNOOC, China’s largest LNG importer, also planned to expand its terminal storage capacity gradually.

Besides, city gas companies and local governments also exert great efforts on the LNG storage station construction, so as to increase the peak-shaving capacity and emergency supply. According to SCI, many new LNG stations and inland transmission terminals will be put into operation from 2018 to 2020, and the LNG replenishment peak before the winter heating season may come earlier than conventional cycles in those years.