2025 Annual Review of China's Natural Gas Market

(I) Stable Growth in Domestic Natural Gas Production

In 2025, China's domestic natural gas production reached 261.9 billion cubic meters, marking a 6.2% year-on-year increase. This represents the eighth consecutive year of production growth exceeding 10 billion cubic meters. Conventional gas remained the primary growth driver, with production surpassing 210 billion cubic meters in 2025.

Against the backdrop of ample domestic supply and slowing consumption growth, China's natural gas imports declined in 2025. Annual imports totaled 128 million tons, down 2.8% year-on-year, reducing the import dependency ratio to 41.4%. Spot LNG imports fell by over 10% year-on-year, becoming the primary factor in the overall import decline, while pipeline gas imports remained relatively stable.

(II) Domestic Natural Gas Consumption Shows Modest Growth

In 2025, China's natural gas demand remained largely stable, with growth significantly decelerating. The annual apparent natural gas consumption reached 426.55 billion cubic meters, a year-on-year increase of 0.1%. On one hand, the slowdown in macroeconomic growth and the ongoing adjustment in real estate-related industries imposed certain constraints on natural gas demand. On the other hand, the phased rebound in international natural gas prices and the resulting rise in end-user gas costs also dampened downstream consumption demand to some extent.

By sector, power generation remains a key driver of consumption growth, with steady expansion of gas-fired power capacity. Annual natural gas consumption for power generation is projected to reach approximately 78 billion cubic meters. Urban gas consumption growth fell short of expectations, primarily due to a relatively warm heating season, with annual consumption reaching approximately 145 billion cubic meters. In the industrial sector, affected by the real estate downturn, industries like ceramics and glass maintained low operating rates, leading to persistent weakness in industrial gas demand, which totaled about 174 billion cubic meters annually. Chemical industry gas demand remained relatively stable, with annual consumption at around 29.55 billion cubic meters.

(3) Basic Completion of the National Natural Gas Pipeline Network

By 2025, China's natural gas trunk pipeline network will be continuously enhanced, with primary pipeline transmission capacity exceeding 400 billion cubic meters, achieving a leap in pipeline transportation capability. The total length of national long-distance natural gas pipelines will surpass 130,000 kilometers, with over 2,000 kilometers of new pipelines constructed annually by 2025. The number of operational LNG receiving terminals will reach 38, with a combined annual receiving capacity of 180 million tons. Working gas storage capacity will reach 34 billion cubic meters. Overall, China will have essentially formed a nationwide natural gas network spanning east to west, north to south, covering the entire country, and connecting to overseas markets.

Specifically, multiple key national natural gas infrastructure projects will be completed and put into operation in 2025, marking milestones in industry development. In storage capacity development, the Yulin 37 Storage Facility in Yulin, Shaanxi, commenced operations as the largest strategic peak-shaving storage facility in central and western China, with a designed working gas volume of 2.7 billion cubic meters. The Wen 23 Storage Facility in North China completed its second-phase expansion, adding 520 million cubic meters of working gas volume and boosting overall peak-shaving capacity by 22%. Regarding backbone pipeline connectivity, the Turpan-Zhongwei section of the West-East Gas Pipeline Phase IV achieved full connectivity, while the initial segment of the Sichuan-East Gas Pipeline Phase II commenced gas intake. These major advancements in national trunk pipelines have significantly enhanced nationwide resource coordination and allocation flexibility, further refining the “single national network” layout.

China's Natural Gas Market Outlook for 2026

By 2026, China's natural gas supply capacity will continue to grow steadily, with total supply projected to exceed 450 billion cubic meters. Regarding domestic gas production, the “Seven-Year Action Plan” concludes in 2025. It is anticipated that the nation will continue advancing domestic oil and gas reserve expansion and production growth in 2026. Domestic natural gas output is projected to reach 270 billion cubic meters in 2026, maintaining a year-on-year growth rate exceeding 3%. For pipeline gas imports, the volume is expected to be approximately 83 billion cubic meters in 2026, remaining largely unchanged from 2025. The China-Russia Eastern Route pipeline will maintain stable supply. The Central Asia pipeline may experience supply fluctuations due to the expiration of purchase agreements between gas-supplying countries and other nations, volatility in upstream production, and increased domestic demand in gas-supplying countries. The China-Myanmar pipeline will see minor supply fluctuations. For imported LNG, approximately 15 million tons of LNG resources under contract are expected to enter the execution phase in 2026, while currently executed LNG import contracts will ensure stable supply. Looking ahead to the 15th Five-Year Plan period, China's natural gas supply security will increasingly rely on the coordinated operation of a multi-source supply structure, cross-regional transmission capacity, and storage-based peak regulation systems, further enhancing risk resilience and emergency response capabilities.

Driven by both economic recovery and energy transition, China's natural gas consumption demand is projected to grow significantly in 2026. China's natural gas consumption is expected to reach 440 billion cubic meters in 2026, representing a year-on-year increase of over 3%. From a consumption structure perspective, the power generation sector will be the core growth driver, with gas consumption reaching approximately 82 billion cubic meters in 2026, growing at an annual rate exceeding 5%. Simultaneously, against a backdrop of increasingly relaxed supply conditions, the economic competitiveness of natural gas relative to other alternative energy sources will continue to improve, thereby stimulating industrial fuel demand growth. Industrial consumption is projected to reach 179 billion cubic meters in 2026, achieving approximately 3% growth. Chemical industry gas consumption is projected to reach 31 billion cubic meters by 2026. In contrast, urban gas consumption will enter a phase of steady growth alongside urbanization and mature pipeline network development, with consumption expected to reach approximately 148 billion cubic meters by 2026, growing at around 2%. Looking ahead to the 15th Five-Year Plan period, under the dual carbon goals, natural gas—as a clean, low-carbon transitional energy source—will maintain steady consumption growth until 2030. By around 2030, China's natural gas consumption is projected to reach 550 billion cubic meters, with its consumption structure continuing to optimize.

SunSirs has been continuously tracking price data for over 200 commodities for more than 15 years, please contact support@sunsirs.com for subscription.