China's natural gas market under the new development pattern

The external environment is unpredictable, and domestic oil and gas companies have always earnestly fulfilled the mission and responsibility of ensuring supply and stabilizing people's livelihood, ensuring the orderly replacement of natural gas production, and maintaining the steady increase of domestic gas production. Multi-channel imports of overseas natural gas, especially the China-Russia eastern route gas steadily increased; Total natural gas supply for the year is expected to be about 397 billion cubic meters, up 6% year-on-year.

New projects and new technologies strongly support domestic gas supply. 2023 is the fifth year of the "seven-year action Plan", domestic energy enterprises will continue to increase exploration and development efforts, is expected to annual domestic natural gas production of about 232 billion cubic meters, up 5%, an increase of more than 10 billion cubic meters. Oil and gas enterprises represented by the three major oil companies continue to focus on the main business, maintain a high investment intensity in exploration, development, production and other links, continue to make new breakthroughs in new levels and new fields, accelerate the construction of new projects, strictly control the decline rate of old oil and gas fields, increase production and ensure supply, and do a good job of the "ballast stone" of the national economy and the stabilizer of energy supply. CNPC will focus on promoting the exploration and development of major breakthrough blocks in the past year, such as the Fudong 1 well in the Tarim Basin and the Tianwan 1 well in the Junggar Basin, so as to realize the conversion of reserves into production as soon as possible. Sinopec's "Deep Earth No. 1" Leap Forward 3-3, which was drilled in May this year, raised the record for the deepest well in Asia to 9,472 meters, while the "Deep Earth No. 1" Shunbei Oil field test well 10X achieved a high oil flow rate of 600,000 cubic meters per day. Cnooc adheres to the development strategy of simultaneously developing oil and gas, stabilizing oil and increasing gas. Baodao 21-1, China's first deep-water large gas field discovered in Qiongdongnan Basin, has proved geological reserves of more than 50 billion cubic meters, which will provide strong support for China's natural gas supply in the future.

The uncertainty of the Central Asian pipeline continues, and the China-Russia pipeline is growing steadily. The China-Russia pipeline contract will increase by 7 billion cubic meters per year, or become the only source of additional imported pipeline gas in 2023. Turkmenistan, Kazakhstan and Uzbekistan from the end of 2022 to the beginning of this year, respectively, due to equipment failure, domestic heating and chemical gas demand growth and other factors affected by short supply or supply, at the same time, Kazakhstan's gas supply contract expires in October this year, Central Asia pipeline gas uncertainty will continue in 2023. The China-Myanmar pipeline is still expected to be affected by the production decline of upstream gas fields and the growth of Myanmar's domestic demand, and the supply will continue to decline slightly. Pipeline gas imports for the year are expected to be about 69 billion cubic meters, up about 8% year on year.

The growth rate of imported LNG has turned positive, and overseas resources have made new breakthroughs. In the LNG medium and long-term purchase and sales contracts signed in China in the past two years, about 12 million tons/year of contract gas supply since 2023, pushing up LNG imports, but there are certain uncertainties in spot imports, LNG imports are expected to be 97 billion cubic meters, up 9% year-on-year. While ensuring the long-term stable supply of LNG and giving full play to the flexibility of LNG spot, domestic energy enterprises are constantly looking for overseas resources and expanding the upstream chain. In April, Sinopec announced its participation in the world's largest LNG project - Qatar North Gas Field Expansion Project (NFE), according to the agreement, Qatar Energy will transfer 1.25% of the shares of the northern gas field expansion project to Sinopec. The investment layout of international LNG resources is an important measure for domestic oil companies to improve the security, stability and reliability of clean energy supply.

The economy has accelerated recovery and a number of favorable policies have been introduced. Natural gas consumption has bottomed out

As domestic production, life, transportation and other aspects return to normal, industrial and commercial sectors have a greater space for demand growth, and natural gas, as an important peak-balancing energy to help the large-scale development of new energy power generation in the process of carbon peaking, will play a more important role. In 2023, natural gas consumption will return to positive growth, and the annual consumption is expected to be about 388 billion cubic meters, an increase of 6%.

The new urbanization process has accelerated, and urban gas consumption has steadily increased. Driven by the increasing improvement of people's living standards and the "double carbon" goal, many provinces and cities continue to implement the "town access" and "village access" project, and the penetration rate of gas and natural gas in cities and towns in China continues to grow. The "14th Five-Year Plan" National Urban Infrastructure Construction Plan proposes that by 2025, the penetration rate of urban pipeline gas should rise from 75.7% in 2020 to 85%, pushing up the total amount of residential and commercial gas use. In order to effectively reduce vehicle pollution emissions and continuously improve the level of ecological green development, the state has successively issued a number of policies such as the "Fourteen" Comprehensive Work Plan for energy conservation and emission Reduction "and" Action Plan for carbon peaking before 2030 "to support the use of LNG as fuel for vehicles and ships, and accelerate the efficient use of natural gas in the field of transportation and the construction of infrastructure such as filling stations. Demand for transportation gas will increase. It is expected that the demand for urban gas will increase by about 6% in 2023.