NDRC expects natural gas prices to continue to climb

China held a national energy conference in early January. The participants included the National Development and Reform Commission and the National Energy Administration. The meeting concluded that China's natural gas demand may increase at a compound annual growth rate of 25% (2011-2015) from 97 billion cubic meters in 2009 to approximately 260 billion cubic meters in 2015, and domestic production may increase from 85 billion cubic meters. (2009) increased to 170 billion cubic meters (2015).

It is expected that CBM production will increase by nearly 20 times, which means that demand may accelerate at a compound annual growth rate of 18% over the past five years. However, it is reported that up to 30 billion cubic meters of natural gas demand may be a reserve demand. On the supply side, up to 80 billion cubic meters of natural gas may come from imports (8 billion cubic meters in 2009), and 20 billion cubic meters of natural gas may come from coalbed methane (less than 1 billion cubic meters in 2009).

The National Development and Reform Commission estimates that the price of natural gas will continue to climb. It is also confirmed that relevant officials of the National Development and Reform Commission predict that natural gas prices will continue to climb, which will promote the improvement of natural gas utilization efficiency. We believe that the increase in natural gas prices will continue to release China’s huge and growing value of the proven natural gas reserves base and reduce the risk of import subsidies.