China Gas Giant Focuses on Homes Amid Winter Crunch Criticism

(Bloomberg) -- China National Petroleum Corp. is restricting natural-gas sales to industries across the country to divert more of the fuel to heat homes in the northern part of the country.

The move is a response to instructions from the National Development & Reform Commission, which called on local governments and gas suppliers to combat gas shortages in the north. An industry group in southeastern China said it will probably face shortfalls as well, and pinned the blame on CNPC.

China Gas Giant Focuses on Homes Amid Winter Crunch Criticism

Natural gas supplies to petrochemical industries will be “severely” reduced, and other industrial direct-sale users will see gradual declines in supply heading into the winter season, CNPC said in a statement on its website Monday. The company said it will coordinate with regional governments to secure supplies to residential users.

CNPC, the main supplier to northern regions, failed to predict the sharp rise in demand for gas after China implemented coal-to-gas conversion projects this year to fight air pollution, Guangdong Oil & Gas Association said in a Dec. 8 statement. The southern province is highly likely to face gas shortages if the weather turns colder and supply from the north shrinks further, it said.

Switching industrial and residential users to gas pushed demand up 19 percent during the first 10 months of the year, according to data from the national development commission. China faces a daily shortfall of 40 million cubic meters of gas, the energy administration of Guizhou province said Friday.

©2017 Bloomberg L.P.