China Gas Supplies May Fall Short of 2020 Target, Bernstein Says

Natural gas supplies in China may fall short of the government’s target of 400 billion cubic meters in 2020 by as much as 45 billion cubic meters, according to Sanford C. Bernstein & Co.

Combined domestic gas production by state-owned PetroChina Co. (857), China Petroleum & Chemical Corp. (386) and China National Offshore Oil Corp. (883) will reach 226 billion cubic meters in 2020, Neil Beveridge, a Hong Kong-based analyst at Bernstein, said in an e-mailed report today. Liquefied natural gas will provide 59 billion cubic meters and 70 billion will arrive via pipeline, he said.

“While the growth rate of China’s domestic gas production has averaged 13 percent in the past decade, we expect the growth rate to slow to 8 percent annually as mature fields decline,” Beveridge said in the report. “Growth in 2013 in particular will slow down to 5 percent year-on-year, the weakest in a decade.”

The lower domestic output from mature fields will be partially offset by an increased contribution from unconventional sources and coal-gasification projects, according to Bernstein.

China’s LNG-receiving capacity may be as much as 47 million metric tons annually in 2020, Beveridge said. PetroChina, China Petroleum and Cnooc have so far signed long-term LNG contracts for 44 million tons and will agree on more, he said.

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