China Petroleum (Sinopec) plans to nearly double its annual gas production by 2020, to 40 bcm, from the current 20.8 bcm (2015).
The company bets on new gas discoveries to reach a production level of 29.5 bcm of conventional gas, 10 bcm of shale gas and 500 mcm of coal-bed methane by 2020; shale gas production from a 2 bcm/year facility in Sichuan (construction to start in 2016) is not included in the 2020 target. In 2015, Sinopec made several significant gas discoveries in Sichuan and in the Erdos basin in Inner Mongolia. The group plans to build new gas pipelines and storage sites (and new small-scale gas liquefaction plants) in Sichuan and along the Yangtze River to supply gas to end user on the eastern coast.
Sinopec expects to benefit from China's shift toward gas, as the country plans to cut coal consumption to 62% of the energy mix by 2020 (from around 64% in 2015) and to raise gas consumption to more than 10% (from around 6% in 2015). The group, which had to cut oil production from high-cost fields in 2015, needs a price of US$60/bbl to make a profit and will increasingly focus on natural gas.