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China faces daunting task

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LNG Industry,

According to the latest report from Reuters, China has set itself a staggering task to cure its pollution problems: switching coal-fired boilers and heating systems in at least 1.2 million households in 28 of its most smog-affected northern cities to run on gas or electricity by October.

Beijing's latest crackdown on pollution dangles a potentially game-changing carrot for the country's saturated global natural gas market.

The projected extra needs would inflate China's gas demand by a quarter, and more than the whole of France consumes in a year. That would offer the prospect of boosting prices in a seller's market and surging LNG imports.

Such expansion is all but impossible without investing in doubling underground storage capacity, building thousands of miles of pipeline to carry the gas in the west to the eastern cities, and installing pump stations in rural villages – all of which is supposed to be complete within a seven months.

The radical plan comes as Beijing ramps up its years-long war on pollution by attempting to wean the nation off coal, its favourite fuel but one that chokes the north during China's cold winter months.

The speed at which the project turned from a draft, issued in January, into an order suggests the government is determined to tackle the problem.

As well as a matter of improving national health, curbing pollution is a key part of a strategy of upgrading the economy by shifting away from heavy industry like public construction projects and tackling overcapacity.

The plan's fate will rest on a massive infrastructure build-out including LNG terminals, storage tanks and pipelines.

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