China gas production falls 2 pct y/y in May

 China's natural gas production in May declined 2 percent from a year earlier to  11.3 billion cubic feet per day, data published by the government showed.

This was the third decline this year as demand growth was dragged down by a weak economy and rising gas prices.

Gas output in the first five months still inched up 2.1 percent year-on-year, compared with a year-on-year increase of 6.6 percent in the first five months in 2014.

Gas demand growth slowed to less than 9 percent in 2014 after double-digit growth in the previous decade, as continued gas price hikes and weakening economhy weighed on consumption.

 

China counts on a fast increase in gas demand, as well as other clean energy use,  to reduce its over-dependence on dirty coal, but rigid gas pricing controls, limited competition in gas market, and cheap coal prices hindered the replacement.

It is expected that the government will soon launch a new market-driven reform in the gas market, as part of its overall plan to liberalize energy market.