SunSirs: During the "15th Five-Year Plan" Period, the Natural Gas Industry Is Set to Ignite with Greater Vigor

According to the China Chemical Industry News, the *Blue Book on Analysis and Outlook of China's Natural Gas Industry (2025)—recently released by the China Association of Petroleum Enterprises—reveals that in 2025, my country's natural gas output achieved an annual increase exceeding 10 billion cubic meters for the ninth consecutive year. This marks the successful fulfillment of the targets and tasks set forth in the "Seven-Year Action Plan" for increasing reserves and production, while maintaining external dependency within a reasonable range. However, bottlenecks such as an irrational consumption structure, an imperfect pricing mechanism, and an ambiguous positioning regarding energy transition remain prominent challenges.

Experts point out that the "15th Five-Year Plan" period represents a crucial stage for the natural gas industry to pursue the parallel objectives of "scale expansion" and "high-quality development." By optimizing the consumption structure, refining the pricing mechanism, and clarifying its strategic positioning within the energy transition, the industry must strive to advance steadily toward a higher-quality and more sustainable future.

Output Climbs Year After Year; Import Structure Continues to Optimize

In 2025, adhering to the guiding principle of "domestic-based supply supplemented by diversified imports," my country's natural gas industry witnessed a steady enhancement in supply capacity, stable operation of the consumer market, and continuous optimization of its import structure.

The *Blue Book* indicates that on the production side, total natural gas output for 2025 reached 261.9 billion cubic meters—a year-on-year increase of 6.26%—marking the ninth consecutive year in which annual production growth exceeded 10 billion cubic meters. Of this total, unconventional natural gas production amounted to 45.08 billion cubic meters, accounting for 17.21% of the output. While the aggregate volume of unconventional gases—such as shale gas and coal-bed methane—increased, their respective growth rates either moderated or saw only marginal gains.

On the consumption side, the *Blue Book* reports that the annual apparent consumption of natural gas reached 426.6 billion cubic meters. The substitution of industrial fuels, gas consumption in advanced manufacturing sectors, and gas-fired power generation for peak shaving emerged as the core engines driving demand growth. Driven by the sustained implementation of "coal-to-gas" policies, the pace of clean energy substitution within the industrial sector has accelerated. Concurrently, as installed capacity for new energy power generation climbs rapidly, the role of natural gas as a flexible power source for peak shaving has become increasingly prominent, providing critical support for the stable operation of the power grid system. Notably, within the structure of primary energy consumption, the share of natural gas consumption rose only marginally—from 8.8% to 8.81%—leaving a significant gap to be bridged to reach the 2030 target of 15%. Regarding imports and exports, the *Blue Book* indicates that in 2025, natural gas imports will total 127.92 million tons—a year-on-year decrease of 2.86%—while the degree of external dependency will fall to 41.32%, remaining within a reasonable range. The import structure continues to optimize, with sources and channels becoming increasingly diversified. Specifically, Piped Natural Gas (PNG) accounts for approximately 46.46% of imports, while Liquefied Natural Gas (LNG) accounts for approximately 53.54%. The primary importers of LNG are Australia, Qatar, Russia, and Malaysia, with these four nations collectively accounting for 83.13% of total LNG imports; meanwhile, the main sources for PNG imports are Russia and Turkmenistan, which together account for 83.7% of the total.

Zheng Xiaoqiang, Dean of the School of Economics and Management at Southwest Petroleum University, points out that although my country’s external dependency remains within a reasonable range, certain regions have begun to experience issues regarding natural gas absorption and utilization; resolving this challenge will be a key priority in the next phase of development. Overall, amidst a complex and volatile international landscape and the deepening process of domestic energy transition, my country’s natural gas industry has demonstrated robust developmental resilience and growth vitality, advancing steadily toward a path of higher quality and sustainability.

Shifting Policy Focus: Industry Shortcomings Remain Prominent

In 2025, the National Development and Reform Commission (NDRC) and other relevant departments intensively promulgated seven national-level policies related to natural gas, signaling a distinct shift in policy focus. Zheng Xiaoqiang observes: "In 2024 and prior years, policy has focused primarily on price regulation mechanisms—specifically, the refinement of pipeline transmission pricing and market-oriented reforms. However, as we enter 2025, the policy orientation has shifted noticeably to prioritize infrastructure development, such as the construction of trunk pipeline networks, the expansion of gas storage facilities, and the strategic layout of LNG receiving terminals."

Specifically, current national policy regarding the natural gas industry centers on four key areas: First, in terms of macro-planning and guidance, the emphasis is on sustaining rapid growth in natural gas production and accelerating the construction of trunk pipelines and storage facilities to fortify the baseline for supply security. Second, regarding planning, construction, and operations, the objective is to establish a unified "national grid" system; this is to be achieved through centralized coordination by the national pipeline network operator, the participation of private capital, and the separation of transmission from distribution—thereby driving the high-quality development of infrastructure. Third, concerning market mechanisms and economic regulation, the focus is on deepening market-oriented reforms and cost controls by refining pipeline transmission pricing mechanisms and strengthening regulatory oversight to ensure fair and open access to pipeline facilities. Fourth, regarding regulatory enforcement and safety standards, the aim is to enhance industry governance capabilities through comprehensive, end-to-end regulatory oversight and the revision of technical safety standards.

The *Blue Book* reveals that, by the end of the 14th Five-Year Plan period, my country had completed the construction of 42 gas storage facilities, boasting a total storage capacity exceeding 100 billion cubic meters and a peak-shaving capacity exceeding 27 billion cubic meters. Additionally, 21 gas storage facilities are currently planned or under construction, with a projected storage capacity exceeding 62 billion cubic meters. The total length of natural gas pipelines stands at 128,000 kilometers; of this, pipelines dedicated to imported natural gas account for approximately 110,000 kilometers—transporting roughly 185 billion cubic meters—while domestic natural gas pipelines span approximately 18,000 kilometers, transporting roughly 76 billion cubic meters. As of 2025, 39 LNG receiving terminals have been commissioned, possessing an annual unloading capacity exceeding 200 million tons and an actual receiving capacity of 160 million tons; furthermore, 13 LNG receiving terminals are currently under construction, with a combined designed annual receiving capacity of 58.9 million tons. During the "14th Five-Year Plan" period, the natural gas industry—spanning the entire value chain from upstream exploration and development to midstream storage and transportation, and finally to downstream end-market consumption—demonstrated a trend of continuous growth. However, influenced by a confluence of factors—including a complex and volatile international landscape, uneven implementation of domestic policies, and inherent industry shortcomings—the sector continues to face five key challenges: First, the consumption structure remains unbalanced, with insufficient support provided by emerging application sectors. Second, pricing mechanisms are imperfect, preventing market-based regulation from fully exercising its role. Third, the industry's strategic positioning within the broader energy transition remains ambiguous, leading to significant uncertainty regarding its future development trajectory. Fourth, supply resilience is inadequate, rendering consumption stability highly susceptible to fluctuations in the international geopolitical environment. Fifth, regional consumption patterns are uneven, and the layout of infrastructure remains incomplete.

In response to these challenges, the *Blue Book* proposes five strategic countermeasures: First, optimize the consumption structure and strengthen the supportive role of emerging application sectors. Second, refine pricing mechanisms to fully leverage the regulatory function of the market. Third, clarify strategic positioning within the energy transition and broaden pathways for synergistic development. Fourth, reinforce supply security to enhance the stability of consumption. Fifth, promote regional coordination to unlock the full potential of natural gas consumption.

Growth Momentum Continues; Industry Positioning Becomes Clearer

The *Blue Book* forecasts that by 2026, my country's total natural gas consumption is projected to range between 446 billion and 455 billion cubic meters. Throughout the "15th Five-Year Plan" period, consumption is expected to follow a generally rapid upward trajectory, approaching the 500-billion-cubic-meter mark by the end of the period. The dividends of this rapid growth in natural gas consumption are likely to persist through 2035. However, whether consumption can ultimately surpass the 500-billion-cubic-meter threshold will depend primarily on a complex interplay of factors, including competition from alternative energy sources, the divergence of energy demand across industrial and transportation sectors, the evolution of pricing mechanisms and market-oriented reforms, and the resolution of bottlenecks in infrastructure and gas storage capacity.

Looking ahead to the "15th Five-Year Plan" period, my country's natural gas industry is expected to sustain its current growth momentum. The *Blue Book* projects that during this period, domestic natural gas production will increase by an annual average of 13.8 billion cubic meters—representing an annual growth rate of 4.79%—surpassing 330 billion cubic meters by the end of the period. Concurrently, proven natural gas reserves are expected to grow by an annual average of approximately 270 billion cubic meters, maintaining a reserves-to-production ratio of 25:1 and ensuring that production remains on an upward trajectory. Furthermore, apparent natural gas consumption is projected to grow at an annual average rate of 2.8%, reaching approximately 489.1 billion cubic meters by the end of the period. Is natural gas merely a "transition fuel" paving the way to a zero-carbon future, or can it evolve into a long-term "primary energy source"? Liu Xianfeng, Director of the China Energy Index Research Center at the School of Economics and Management at Southwest Petroleum University, observes: "Judging by the shifts in production and consumption structures between the 13th and 14th Five-Year Plan periods, the status of natural gas is steadily rising. Currently, natural gas is increasingly displacing coal and oil. Given its characteristics as a clean energy source, natural gas plays a pivotal role in the implementation of the 'Dual Carbon' strategy." He further emphasizes, however, that achieving cost-effective, large-scale development—particularly regarding shale gas and tight gas—still faces significant cost-related hurdles. While substantial breakthroughs have been achieved in extraction technologies, the economic viability of such operations remains a prominent challenge.

Sun Renjin, a professor at China University of Petroleum (Beijing), offers a complementary perspective: "At the national level, natural gas has already been designated as one of the country's primary energy sources. Currently, natural gas accounts for only 8.81% of China's total primary energy mix—a figure that still lags somewhat behind the global average. Viewed from this angle, my country's natural gas sector retains considerable room for future growth."

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.