BEIJING—China’s natural gas output rose in December to the highest monthly rate since at least 2014 as state energy firms rushed to fill a supply gap sparked by surging winter demand from a drive to switch millions of households to gas from coal for heating.
Companies produced 13.6 billion cubic meters (Bcm) of gas in December, up from 12.6 Bcm in November, pushing up output for the whole of 2017 by 8.5% to 147.4 Bcm, data from the National Statistics Bureau (NSB) showed on Jan. 18.
Beijing last year ordered millions of households and industrial plants in 28 northern Chinese cities to change to gas heating from coal as part of its war against pollution.
But the jump in demand and inadequate storage and pipeline networks led to a severe supply crunch.
State energy majors maximized December production at key gas fields such as Changqing in the country’s west and Fuling in southwestern Sichuan, while scaling back internal gas use and curbing fuel supply to industrial users.
Sinopec said this month its 2017 gas output had risen 19% over 2016, and that it had recently started up 13 new gas wells.
Domestic wholesale prices for LNG, which are not regulated by the government, hit an all-time high in December near 10,000 yuan ($1,554) a tonne in northern China.
Prices have since dropped more than 40% thanks to stronger domestic production, as well as record imports of both pipeline gas and LNG.
“With supplies catching up and industries set to slow down activities as the Lunar New Year break nears, the market shall be more balanced,” said a senior official with PetroChina.
Crude Runs Increase Biggest In 4 Years
The NSB also said China’s oil refinery throughput rose 3.3% in December from a year earlier to 49.11 million tonnes, or 11.56 million barrels per day (bbl/d), off a record of 12.03 million bbl/d in November.
Refinery output for the full year gained 5% to 567.77 million tonnes, or 11.36 million bbl/d. That would mean an average increases in runs this year of around 540,000 bbl/d, according to Reuters calculations based on the data.
Harry Liu, an analyst with consultancy IHS Markit said the annual growth figure marked the biggest gain in four years, and pointed to an acceleration in throughput in the last four months of the year.
“Runs expanded much faster since September compared to earlier in the year to an extent that could barely be supported by market fundamentals,” said Liu.
NSB said crude oil output fell 4.4% in December to 15.98 million tonnes, or 3.76 million bpd, and output for the full year was down 4% at 191.51 million tonnes, or 3.83 million bpd.
State energy group CNPC on Tuesday forecast China’s crude oil output would rise 0.2% in 2018, on the prospect of higher global oil prices, which have clawed their way back to near $70 a barrel.