How to develop natural gas more "confidence"



Recently, the Development Research Center of The State Council released the white paper "China Natural Gas Development Report (2019)". The report pointed out that in 2018, China solidly promoted the construction of the natural gas production, supply, storage and marketing system, and gradually landed the policy mechanism, major layout and key projects, ushering in a period of strategic opportunities for the development of the natural gas industry. With the continuous maturity of the natural gas consumption market, the future industrial fuel, urban gas, power generation gas will present a "three-pillar" situation.

It is worth noting that the current development of China's natural gas industry is not coordinated and inadequate problems are still prominent, and the construction of production, supply, storage and marketing system has a long way to go. Experts suggest that we should vigorously enhance exploration and development efforts, make up for the shortcomings of gas storage and peak regulation with the construction of natural gas pipeline network, focus on promoting market system reform, accelerate the construction of natural gas production, supply, storage and marketing system, and strive to achieve high-quality development of the natural gas industry.

We will improve the production, supply, storage and marketing system

In recent years, the global natural gas exploration has made continuous breakthroughs, and the natural gas supply capacity has continued to increase. International liquefied natural gas (LNG) trade is active, the integration of the world market is accelerating, the "Asian premium" is easing, the trade mode is more diversified, and the contract is more flexible, which provides more favorable conditions for the introduction of natural gas resources.

In our country, natural gas plays an important role in the energy revolution. In 2018, in accordance with the decision-making and deployment of the central government, all departments, localities and oil and gas enterprises strengthened the top-level design of natural gas development, vigorously enhanced exploration and development efforts, improved the layout of infrastructure in key regions, accelerated the interconnection of pipe networks, strengthened the weak board of gas storage capacity, improved the market mechanism, strengthened supervision and coordination, and achieved solid results in the construction of the production, supply, storage and marketing system.

More importantly, the state has intensified efforts to promote the interconnection of natural gas infrastructure and the construction of gas storage capacity, gradually improved the layout of infrastructure, and continued to advance the interconnection work. In the 2018 to 2019 heating season, connectivity projects such as "South Gas to North" achieved the goal of adding 60 million cubic meters per day of gas supply capacity, effectively guaranteeing the supply of natural gas in North China. By the end of 2018, the total length of China's natural gas trunk pipelines had reached 76,000 kilometers, with a gas transmission capacity of 320 billion cubic meters per year.

Wang Yiming, deputy director of the Development Research Center of The State Council, said that natural gas, as a high-quality energy with convenient use, high energy density, clean and low-carbon, has the potential to replace coal, oil and other high-emission fossil energy on a large scale in the next 20 years or so through deep integration and collaborative development with renewable energy. Therefore, accelerating the development of natural gas and striving to become the main energy in China will greatly increase the proportion of clean energy in China's energy structure and truly realize the upgrading of energy quality.

The problem of "stuck neck" needs to be solved urgently

Zhang Yinghong, deputy director of the Oil and gas Resources Strategy Research Center of the Ministry of Natural Resources, said that in recent years, the national policy support is strong, and the investment of oil and gas enterprises is also strengthening, with the pipeline network, reserve and other infrastructure investment and construction efforts to increase, the natural gas industry will have better development in the future.

However, the report pointed out that the construction of China's natural gas production, supply, storage and marketing system still has a long way to go, the problem of uncoordinated and inadequate development of the industry is prominent, and the reform and innovation of institutional mechanisms are still facing challenges.

The report shows that rising imports of natural gas are putting pressure on energy security. From 2007 to 2018, the average annual growth of natural gas consumption in China was 19.07 billion cubic meters, the average annual growth of natural gas production was 8.28 billion cubic meters, the supply gap was expanding, and the average annual growth of natural gas imports was 10.79 billion cubic meters. In particular, the decline in international oil prices in 2014 led to a reduction in domestic exploration and development investment, and more need to rely on imports to meet consumption.

At the same time, ecological protection also puts forward higher requirements for the high-quality development of natural gas. Oil and gas resource rich areas and important ecological function areas, ecological environment sensitive and vulnerable areas objectively overlap, coupled with the current laws and policies lack of detailed regulations on the classification control of production and construction activities in environmentally sensitive areas, oil and gas production and construction activities in environmentally sensitive areas are restricted.

Insufficient gas storage capacity and market mechanism have become the two major weaknesses restricting the development of the industry. With the acceleration of the construction of natural gas production, supply, storage and marketing system and the successive issuance of policy documents in the field of gas storage and peak regulation, the construction of gas storage facilities has begun to concentrate, but subject to the long construction period of underground gas storage and LNG storage tanks, it is expected that there is greater pressure for gas storage capacity to meet the standard on time. With the gradual push of institutional reform, the "rapid development period" and "reform pain period" of the natural gas industry are superimposed, coupled with incomplete supporting policies, and the game of the upper, middle and downstream market players is becoming increasingly fierce.

"The most prominent problem in the natural gas industry at present is that the gas supply regulation ability is seriously lagging behind, the upstream supply market players are too few, and the cost of the entire industrial chain needs to be further reduced." Zhang Yuqing, former deputy director of the National Energy Administration.

"The 'stuck neck' problem of upstream exploration and development of natural gas needs to be broken; The dependence of natural gas on foreign countries is rising too fast, which makes the security risk of supply obviously intensified. The construction of gas storage facilities lags behind the growth of demand, resulting in insufficient gas storage capacity; The market mechanism is not smooth, resulting in high gas prices for end users is still a prominent problem." Wang Yiming said that if these problems are not solved, it is likely to have a serious impact on the long-term development of natural gas.

To increase storage and production requires vigorous exploration

Developing natural gas into one of China's main energy sources is an important part of building a clean, low-carbon, safe and efficient energy system.

From the perspective of future trends, natural gas accounts for 23% of the world's energy consumption structure, which is still the only fossil energy source to grow in the future, and the International Energy Agency (IEA), BP and other institutions predict that natural gas will surpass coal to become the second largest energy source around 2035.

Li Ye, regulatory director of the National Energy Administration, said that in 2018, the external dependence of natural gas exceeded 40%, and the energy security situation was relatively severe. To accelerate the construction of a natural gas production, supply, storage and marketing system, the key is to enhance exploration and development capabilities. We should not only firmly position natural gas as the main energy source, but also increase domestic storage and production. We should also further accelerate the implementation of projects to strengthen weaknesses, and coordinate the construction of natural gas pipelines, natural gas receiving stations, underground gas storage, emergency gas storage and regulatory facilities. Strengthen the interconnection of infrastructure, enhance the ability to ensure the supply of natural gas, and effectively promote the high-quality development of natural gas.

Hao Fang, president of China University of Petroleum (East China) and academician of the Chinese Academy of Sciences, also believes that to ensure the high-quality development of the natural gas industry, it is necessary to promote all-round reform and innovation, but the most basic is to increase oil and gas exploration efforts, especially to increase natural gas exploration efforts, and solve the core problem of increasing storage and production.

The report recommends that at present, we should plan the major layout of the construction of natural gas production, supply, storage and marketing system, make every effort to build a natural gas production base in the Sichuan Basin, make every effort to build a major natural gas production area in the Ordos Basin and Xinjiang region, make every effort to build an offshore natural gas production base, strive to "fully blossom" the exploration and development of unconventional natural gas, and accelerate the construction of regional underground gas storage groups. We will strive to build a natural gas supply guarantee system around the Bohai Sea. At the same time, it is necessary to orderly develop alternative energy sources, increase the construction of demonstration projects on the basis of existing coal-to-gas production capacity, and promote the implementation of strategic technology reserve and capacity reserve tasks. Focus on supporting the development of bio-natural gas clean heating in northern rural areas, and strive to achieve breakthroughs in bio-natural gas production.

At the policy level, Wang Yiming suggested that, first, we should deepen the reform of the oil and gas system and mechanism, and explore the formation of a market mechanism conducive to the long-term entry of multiple market players into orderly competition; Accelerate the establishment of national oil and gas pipeline network companies in the middle reaches, coordinate infrastructure construction, and reduce the cost of natural gas intermediate links; The downstream continues to promote marketization and price reform, and indeed reduces the cost of gas consumption of enterprises from the "last kilometer". Second, it is necessary to strengthen the supporting policies and measures, continue to study supporting fiscal, tax, financial technology and industrial support policies conducive to increasing natural gas storage and production, establish a coordination mechanism for natural gas exploration and development, infrastructure construction and ecological environmental protection, arable land protection and ecological red line demarcation, to ensure the smooth implementation of the construction of natural gas production, supply and marketing system. Third, it is necessary to continue to expand the opening to the outside world. While focusing on "going out", we should also attach great importance to "bringing in", and form a new situation of China's foreign cooperation in the oil and gas field under open conditions.