Gas price cuts lure customers away from coal

Workers conduct a gas test at an energy station to ensure safe operation at an industrial park in East China's Jiangxi province in March, 2014. [Photo / Xinhua]

China's natural gas demand has been boosted by price cuts aimed at switching users from coal to the cleaner fuel, according to one of the country's biggest gas distributors.

ENN Energy Holdings Ltd has seen its sales rise more than 15 percent in January and February as lower prices encouraged customers to switch, Vice-Chairman Cheung Yip-sang said in Hong Kong. ENN expects full-year sales to rise 15 percent, following last year's 11.5 percent jump to 11.3 billion cubic meters.

"The movement really picked up a lot of momentum," Cheung said. "The higher burning efficiency of gas and government pressure for better emission standards will help convert more industrial users from coal to gas."

The government adjusted gas prices twice last year to stimulate demand and shift consumption from coal, which makes up 64 percent of the country's energy mix. The share of natural gas may rise from its current 6 percent, the company said last week, adding that users switching from coal made up 39 percent of new commercial and industrial customers last year.

China's gas demand expanded 3.3 percent in 2015, while coal consumption dropped 3.7 percent, declining for the second year, according to the National Bureau of Statistics.

Coal use will slip further this year amid tepid demand from industrial users, according to the China Coal Industry Association.

The country's liquefied natural gas imports in the first two months of 2016 jumped more than 14 percent and shipments by pipeline rose 15 percent to a record.