Gazprom Delighted By China Announcement Nat Gas Need To Soar By 150% In 6 Years

Tyler Durden's picture

It may comes as a surprise to many, if certainly not the country known as Gazpromia, that according to a government statement released on Wednesday, China will raise its natural gas supply to a whopping 420 ­billion cubic meters per year by 2020 on soaring demand due to urbanization, a government statement said on Wednesday. This compares roughly 168 bcm in gas used in 2013, which means somehow China hopes to boost gas production by over 150% in just 6 years.

The increased supply will ­cater to the rising demand for natural gas in people's daily lives, schools, nursing homes, home heating, as well as in buses and taxis, according to a statement published on the central government's website.

According to Global Times, the supply increase is also driven by the nation's efforts to mitigate air pollution stemming from an over-reliance on coal, the statement said. Sounds familiar - only problem is that the same narrative, used in the US time and time again, has achieved virtually nothing in fixing said over-reliance on coal.

Global Times adds that tTo expand natural gas production, investment in gas storage facilities as well as their construction and operation will be open to all market players, the statement said.

And the best news for gas E&Ps: companies will also have the option to issue bonds to raise capital for the construction of storage facilities. The government will offer favorable land policies for ­sto­rage facility projects, the statement said.

China's total consumption of natural gas rose 13.9 percent year-on-year to 167.6 billion cubic meters in 2013, according to a report published on January 15 by the Economic and Technology Research Institute of the China National Petroleum Corp.

 

The higher consumption led to a 25 percent increase in imports, totaling 53 billion cubic meters last year, 31.6 percent of the total consumption.

 

Supplies will continue to be tight this year, the report said, predicting that the natural gas consumption would expand 11 percent this year to 186 cubic meters.

And the well-known punchline to Zero Hedge readers: China and Russia aim to wrap up a 10-year series of talks about Russian gas supplies before Russian President Vladimir Putin visits China in May, Reuters reported on April 14.

Which is also the key: Russia knows very well that when it comes to organic growth, China will be woefully unprepared to boost its own production nearly threefold in just over five years. Which is where Gazprom and Putin's holy grail deal come in. Because while Russia is happy to sit on the sidelines as China pretends its own producers can strike gold, or in this case gas, it knows they won't. And it will be more than happy to provide all the gas shortfall China has - in the process joining China in the hip in a symbiotic relationship that solidifies the most important post-New Normal concept we first dubbed the Gas-O-Yuan.