Wed, 01 Dec 2021

BEIJING, China: Amid anoutlook for cold winter temperatures, China's quest for obtaining larger volumes of natural gas is expected to further jar world energy markets.

China, with the largest energy consumption worldwide has, over the last few years, swiftly evolved into a country that has sharply increased its natural gas purchases amid its enormous sway over international trade patterns.

Environmental regulations, coupled with safety constraints pertaining to coal, maximum use of LNG export facilities globally, as well as soaring commodity rates, have resulted in the nation reeling from energy supply shortages. China's voracious natural gas appetite has additionally been backed by policies which have driven the replacement of coal-fired plants with natural gas, in addition to robust growth in the economy.

During the past weeks, over 50 percent of Chinese provincial regions are receiving rationed energy, "sending already hyperactive coal and natural gas prices further north," said Gavin Thompson, Vice Chair at Wood Mackenzie, Gavin Thompson, as quoted by Natural Gas Intelligence. "China's leadership undoubtedly anticipated this, but as the country's power crisis mounts, the message to its state-owned energy suppliers is clear: blackouts this winter will not be tolerated," Thompson added.

In September, Chinese state agency NDRC made it known that it will extend assistance to drive domestic natural gas output, as well as help to obtain additional coal and imports of liquefied natural gas. During a special meeting, the government apparently instructed government-owned firms to seek out supplies of energy during the current winter months.

"The impact of China's power crunch is being felt globally," Thompson mentioned in a blog posting in the initial part of October. "As Beijing's 'at all costs' directive pushes coal and gas prices higher, governments, energy suppliers and customers across Asia and Europe are bracing for a tough winter ahead," he added.

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