China March gas consumption growth at 6-month low

China's apparent gas consumption rose 4.7 percent year-on-year to 17.7 billion cubic feet per day in March, the slowest growth since October, data from government departments showed.

Consumption in the first quarter of this year gained 6.4 percent from a year ago, lower than the 10.1 growth in the first quarter of 2014. the warmer-than-usual winter weather reduced heating demand for gas. A hike in gas prices last year and weak economic growth also dampened demand for the fuel.

The slowing growth suggests it would be impossible for China to reach its goals of 8.12 tcf gas consumption in 2015 and very challenging for it to raise the share of gas to 10 percent in primary energy use by 2020 from the current level of less than 6 percent.,

China's gas consumption growth slowed to one digit in 2014 after double digit growth in the past ten years.

China merged its two-tiered pricing systems into one from April 1 and allowed big gas users to negotiate gas prices with suppliers like CNPC, Sinopec and CNOOC in a pilot scheme, marking a step forward toward liberalising gas prices in the future. But it remained unclear if the pilot scheme works as the supply side is dominated by a few state-owned giants.

Gas consumption has been partly substituted by oil products like LPG in the past nine months as gas prices are rigidly controlled by the government and was hiked once last year, moving in opposite direction with oil prices.

Gas consumption growth could have been increased if China followed strictly with its pricing rule, according to estimates made by the China Natural Gas Industry Association, an alliance of gas industry players. "Based on the price changes in imported LPG and fuel oil in the first quarter, citygate gas prices could be cut down by about one third from the current levels," said Bai Jun, vice chairman of the association.