October 15, 2025

Despite the growth of renewable energy and a continued heavy reliance on coal-fired power generation, Incorrys believes China’s need for natural gas must increase significantly to meet growing energy demand going forward. Currently, China utilizes a mix domestic production, pipeline gas, and liquefied natural gas (LNG) to meet their natural gas requirements. Incorrys has examined how their natural gas supply mix might evolve over the next decade, and the potential role Canadian LNG might play. China consumed just over 41 Bcf/d of natural gas in 2024 with about 60% of this demand being met by domestic production and the remaining 40% covered by imports. Roughly half of the imported gas arrives via pipeline — mainly from Russia and Turkmenistan — and the other half comes in the form of LNG. Figure 1 shows China’s expected 2025 natural gas supply mix required to meet demand with about 60% (25 Bcf/d) met by domestic production, 20% (over 8 Bcf/d) via pipeline gas, and 20% (over 8 Bcf/d) from LNG imports from numerous countries.

Figure 1: China’s Natural Gas Supply Portfolio in 2025

China’s natural gas demand has grown steadily since 2017 at an average annual rate of about 8%. The industrial sector accounts for the largest share at 50% (20.5 Bcf/d), followed by city gas distribution at 34% (14 Bcf/d), with power generation making up the remaining 16% (6.5 Bcf/d). Over the last few years Chinese domestic production has grown steadily at a rate of 6-8% per year and is expected to reach over 25 Bcf/d in 2025. Incorrys estimates that domestic production will continue to grow, however the growth rate will gradually slow due to the limits of technological improvements and maturity of some fields. Our forecast is for total domestic production to reach 37.5 Bcf/d in 2035.

CNPC, China’s largest oil and gas company, forecasts natural gas demand in China will rise to 58 – 65 Bcf/d by 2040. The lower end forecast is based on a carbon-neutral scenario. The same study projects that China’s domestic gas production will peak at 27 – 30 Bcf/d between 2035 and 2040. This means that by the second half of the 2030s, China’s total natural gas imports will need to double from the current 17 Bcf/d up to 28 – 38 Bcf/d. Figure 2 shows China’s total natural gas demand forecast to 2035 according to a base scenario, which Incorrys considers as most realistic (Ailin, Gang, et.al, 2023).

Figure 2: China’s Natural Gas Demand Forecast

References:
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Reynolds, Sam. “Understanding the competitive landscape for China’s LNG market.”, Institute for Energy Economics and Financial Analysis, April 2025, https://ieefa.org/resources/understanding-competitive-landscape-chinas-lng-market

“Statistical Review of World Energy 2025”, Energy Institute, https://www.energyinst.org/statistical-review/home . Accessed 17 September, 2025

Ailin, Jia. Gang, Cheng. Weiyan, Chen. Yilong, LI. “Forecast of natural gas supply and demand in China under the background of “Dual Carbon Targets”.”, ScienceDirect, April 2023, https://www.sciencedirect.com/science/article/pii/S1876380423604045

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