Energy Central Professional


Natural gas shortages hit China as temperatures plunge

, Natural gas shortages hit China as temperatures plunge  


    BEIJING For many people across China, a shortage of natural gas and alarmingly cold weather are making a difficult winter unbearable. For Mr Li Yongqiang, they mean freezing nights without heat.

    "We dare not turn on the heat overnight -- after using it for five or six hours, the gas stops again," Mr Li, a 45-year-old grocer, said by telephone from his home in northern China's Hebei province. "The gas shortage is really affecting our lives."

    The lack of natural gas, which is used widely across China to heat homes and businesses, has angered tens of millions of people and spilled over into caustic complaints on social media.

    One person in Hebei province wrote of waking early four nights a week because she was too cold to sleep despite two comforters on her bed. A viral video on China's Internet shows a high-rise apartment building in a different northern province, Shanxi, with the windows plastered with bright red posters of the sort often seen at Chinese New Year -- except that these posters say "cold".

    Already this winter, hundreds of millions of people have caught Covid-19 since Mr Xi Jinping, China's top leader, abandoned his zero-Covid policy in early December.

    That policy had kept infections low but required costly precautions such as mass testing -- measures that exhausted the budgets of local governments. Many towns and cities now lack the money they need to even pay their own employees, much less to maintain adequate supplies of gas for homes.

    The crunch, experts said, has exposed systemic weaknesses in China's energy regulations and infrastructure, while showing the reach of the global market turmoil provoked last year by Russia's invasion of Ukraine.

    Russia has long been a major supplier of natural gas to China and many regions, particularly Europe.

    When Russia halted exports to Europe last summer, nations bid up world prices as they stockpiled supplies from elsewhere.

    A surprisingly warm winter has since helped push gas prices lower in Europe, but the bitter cold is now pushing them even higher in China.

    At the same time, China's provincial and municipal governments have reduced customary subsidies for natural gas consumption that used to keep a lid on heating bills. The national government has responded by telling local governments to provide heat, without giving them money to pay for it. As a result, gas is effectively being rationed, with households receiving the minimum needed for cooking food but very little for heat.

    "It's a perfect winter storm for Xi," said Dr Willy Lam, a long-time analyst of Chinese politics who is a senior fellow at the Jamestown Foundation. "Nothing seems to be working, partly because nobody seems to have much cash."

    In China, the weather has become unusually frigid. Over the weekend, numerous weather stations in northernmost China's Heilongjiang province reached the lowest temperatures they had ever recorded. Mohe City, the northernmost city in China, reached lows for three consecutive days below minus 50 deg C. China's meteorology agency has issued nationwide warnings this week of very cold weather.

    The government has taken notice of the gas shortages.

    "Some localities and enterprises have not implemented measures to ensure the supply and price of energy for people's livelihood," Mr Lian Weiliang, vice-chair of the National Development and Reform Commission, China's top economic planning agency, said at a news conference on Jan 13.

    He added that the national government would hold local officials responsible for supplying homes, but did not indicate that Beijing would provide any money to help them do so. China will also build more natural gas storage sites, he said, to try to avoid similar problems in the future.

    China actually has enough natural gas to make it through the winter, said Ms Yan Qin, a China energy specialist at Refinitiv, a data company in London. The problem is that pricing regulations and declining subsidies are preventing gas from reaching households in northern China when temperatures plunge.

    Much of the world has shunned Russian energy during the war, but China has stepped up its purchases of natural gas from Russia. Imports from Russia of liquefied natural gas, which can be transported by ship, jumped 42.3 per cent last year, as Chinese companies bought cargoes that businesses in Japan and elsewhere were no longer willing to buy because of Russia's invasion of Ukraine.

    Much of that Russian gas was imported at very high prices. But Chinese regulations strictly limit the price at which municipal and township gas distributors are allowed to sell gas to households. This winter, the wholesale cost of gas is up to three times the price that distributors are allowed to charge residential customers, said Ms Jenny Zhang, a natural gas expert at the Lantau Group, an energy and power consulting firm in Hong Kong that specialises in China.

    Distributors are allowed to pass along extra costs to industrial and business users of gas, but not to individuals. So when prices rise, the companies have a big incentive to cut off homes and sell mostly to industrial and commercial users.



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