Chinese gas producers are curbing conventional gas production owing to slowing gas demand. In the first seven months of 2015, domestic gas production increased by 2.6%, compared to a 6.9% annual growth in 2014 (and to a double-digit growth over the last decade).
Sinopec and PetroChina have reduced production at two large conventional gas fields in the Sichuan gas basin, due to increasing production at shale gas projects. In late August 2015, Sinopec had closed 12 wells at its large Puguang gas field (annual production capacity of 12 bcm/year) and planned to shut another 15 wells; the field was producing 10 mcm/d of gas in late August, from 20 mcm/d in early 2015 (reduction of roughtly 3% of national production). PetroChina also reduced gas production from its Moxi block in the Anuye field (one of the largest gas reservoirs in China), to adjust to market conditions.
Shale gas is gaining momentum in China and producers remain on track to meet the government-set shale gas target in 2015: hundreds of shale gas wells should be developed by the end of the year to reach a production level of 7.6 bcm (6% of estimated gas production in China). Shale gas production costs are twice higher than for conventional fields but are supported by a government grant of Cyu 0.40/m3 (US$6.3c/m3); the subsidy will decrease after 2015.