Chinese gas production growth slows in June

China's domestic gas output rose on the year in June but the year-on-year growth was slower than in previous months, which could support demand for imported gas.

Domestic gas production rose to 15.2bn m³ last month from 13.9bn m³ in June 2019, data from China's national statistics bureau show. This equates to 9.2pc growth from the same period a year earlier, down from 10.5pc in May and 14.6pc in April. Gas production grew by 9.4pc on average last year compared with 2018.

China's apparent gas demand increased by 8pc on the year in January-June, despite the economic impacts of the Covid-19 pandemic. This was met by stronger domestic output and a rise in imports for every month over the period except March, when they inched down by 0.3pc on the year (see chart).

It is unclear whether gas production is expected to slow further in the coming months. China's National Energy Administration (NEA) issued a report last month forecasting a 4.6pc increase in production this year compared with 2019, despite gas output being already 11pc higher than a year earlier in January-May. Domestic production would have to fall by 1.5pc on the year on average in July-December to meet the NEA's annual growth target.

Slower domestic production growth in the coming months could further boost demand for imported LNG and pipeline gas. Chinese buyers have absorbed increasing quantities of LNG in recent months, with imports growing by 12.9pc in April and 19pc in May, according to customs data. Official data for LNG imports in June are not yet available, but preliminary ship-tracking data suggest year-on-year growth of 15.5pc for the month.

By contrast, imports of pipeline gas had slowed in previous months, but preliminary ship-tracking data suggest a small uptick in pipeline deliveries in June. Chinese buyers may have had to start increasing deliveries of oil-linked pipeline gas to meet their take-or-pay volumes, after falls in oil prices earlier this year had provided an incentive to maintain slow deliveries of oil-linked volumes in recent months.

By Livia Gallarati

China's apparent gas demand bn m³

Chinese gas production bn m³