China's Natural Gas Dependency Increases Year-on-year

China's natural gas dependency has been on the rise in recent years, reflecting a shift in the country's energy strategy. According to recent data, China’s total primary energy consumption reached 3.62 billion tons of standard coal in 2012, marking a 4% increase compared to 2011. While coal remained the dominant source, accounting for 66.4% of the energy mix—down by 2 percentage points from the previous year—natural gas still only made up around 5.5%, a slight increase of 0.5% from 2011. The newly released "12th Five-Year Plan for Energy Development" sets an ambitious target: increasing natural gas’s share of primary energy consumption to 7.3% by 2015. Despite this goal, China's natural gas consumption remains significantly lower than global averages. In 2012, the world average stood at 25%, while India consumed about 17%. This gap has led some experts to call for stronger policy support and greater investment in natural gas infrastructure to meet future demand. Currently, most of China's imported natural gas comes via pipelines, which limits the volume of liquefied natural gas (LNG) imports due to logistical constraints. On the demand side, however, natural gas usage has been growing rapidly, with annual growth rates hovering around 15%. Experts suggest that, given the uncertainty surrounding unconventional gas production, China's continued growth in natural gas consumption will largely depend on increased imports. This, in turn, relies heavily on the development of pipeline networks in the northeast, southwest, and northwest regions. Moreover, the expansion of natural gas use also hinges on reforming the pricing mechanism. A more market-oriented pricing system could encourage investment and boost corporate participation. However, such a mechanism is not yet fully implemented nationwide, and the scarcity of natural gas resources is not yet adequately reflected in its price. As China continues to transition toward cleaner energy sources, addressing these challenges will be crucial in shaping the future of its natural gas sector.

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