Dec

31

Just learned there is a severe shortage of natural gas in many cities in China.

In a large southwestern city with a population of about 10M and near huge NG fields in the country, the NG usage is up 400K cubic meters per day over same period of last year. As a result, the municipal NG company has a shortage of 300K cubic meters per day, and has to cut off services to various sections in the city everyday.

The increase of demand is likely a major trend for the coming years. More and more people's homes in cities and towns are furnished with NG pipes in recent years for home cooking. A major reason in my view has to do with winter heating. The country provides public heating only to towns and cities in the northern part of the country, leaving those in southern part (roughly half of the country size) and all villages with no public heating. That has been the case all along the many decades. The northern villagers generally have to burn in house whatever they can find cheap (usually wood).

In northern cities, partly due to calls for better air quality in recent years, some public heating facilities have switched from coal to NG. Take Beijing for example, the NG usage for the city on December the 24th is 62.57M cubic meters. Shandong province has seen the annual NG usage reaching 4B cubic meters, an increase of 20% over 2011.

Traditionally, all southern people spend the winter in the cold (temperatures may stay in the single digit or 10'es Celsius for various length of the time in a year, usually a few months) without any heating. This was not because it was not cold enough for them, but because they could not afford any heating without government's provision. Only in recent years, as city people get richer and move in to their new housing, many install in-house burners for winter heating (in place of or in addition to air conditioners). A predominant choice of fuel for these burners is the NG as it has been very cheap relatively (on average, the residential price is about 2.3 yuan per cubic meter).

NG price in China are priced in cubic meters, which is argued to be abnormal. One report cited the wholesale price in China is about US$3.34 ～ US$6.81 per million BTU in 2011, much lower than US$11.15 in Germany for instance in the same period.


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