China gas production rises as coal rebounds

LUNNAN, XINJIANG - OCTOBER 11: Chinese labourers work at the Natural Gas Extraction Spot, Lunnan Station, on the "West to East Gas Transportation Project" on October 11, 2006 in Lunnan county, Xinjiang Uygur Autonomous Region, China.   China is considering opening oil exploration blocks in it's smaller basins to private domestic private companies in what could be the first step toward introducing competition in the country's highly regulated upstream energy market, according to China Daily reports. (Photo by Guang Niu/Getty Images)



China’s natural gas production surged to a record last month and coal output rebounded as economic growth accelerated power use in the world’s largest energy user. Natural gas production in March rose 8.2 percent from the average of the first two months of the year to a record 13.6 billion cubic meters, according to data Monday from the National Bureau of Statistics. Coal output rose almost 13 percent over the same period to average 9.67 million tons a day, the highest daily level since December, according to Bloomberg calculations based on the data.
The nation’s economy accelerated for a second-straight quarter as investment picked up and factory output accelerated in March. China’s power output last month increased 7.2 percent from a year ago, the fastest pace since October, Monday’s today showed.
“China’s fundamental demand for coal and natural gas has improved alongside better-than-expected economic growth in the first quarter,” Tian Miao, an analyst at North Square Blue Oak Ltd. in Beijing, said by phone. “The government’s investment in infrastructure has boosted power consumption while the move to replace coal with gas to fight pollution is also gaining some traction for gas demand.”
Government-enforced coal mining limits last year cut production by 9.4 percent, which nearly caused prices to double. Most coal miners will be exempt from limits this year as long as prices stay within a “reasonable range,” the National Development and Reform Commission said last month, referring to a domestic price level above 500 yuan a ton.
China’s benchmark Qinhuangdao coal price was 652 yuan a ton, the China Coal Transport and Distribution Association reported Monday, falling for a second week. Prices peaked last year at 700 yuan amid the government restrictions.
Shale gas output in March surged 50.4 percent year-on-year to 1.15 billion cubic meters after projects in the Changning-Weiyuan area in Sichuan entered operation, NBS said in a separate statement Monday. Shale production in the first quarter was 2.67 billion cubic meters, up 17.4 percent.

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