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China boosts demand for natural gas

June 25th, 2009 · 2 Comments

It makes sense, it’s a lot cleaner and cheaper than oil…

Natural Gas Should Get a Boost from China’s New Demand
Kelvin Schulle

China has been developing natural gas vehicles for many years, recently the number of vehicles running on nat gas has risen dramatically. For example, the government of Xi’an in western China, a medium size with 8M population, has decided to mandate all city buses and taxis using natural gas. The government website reported 5000 buses and 20000 taxis were using nat gas in 2008, and the number is expected to grow in coming years. This is just a tip of the iceberg. Nat gas may become a major alternative fuel to oil in China, and demand is ramping up.

The problem is China does not produce enough natural gas to meet its demand. China City Gas organization has predicted market demand to reach 110 billion cubic meters in 2010, growing from 80 billion cubic meters in 2008. However, natural gas supply in 2010 is expected to mark 90 billion cubic meters, falling short of market demand. As a result China needs to import at least 20 billion cubic meters in 2010 from overseas. This is expected to boost natural gas price going forward. With natural gas price at a historic low of $3.74, investors should take advantage and invest in an ETF such as (UNG), or producers such as Chesapeake Energy Group (CHK), Devon Energy Corp (DVN) and XTO Energy (XTO).

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Well, they’re building at least 10 new LNG import (regassification) terminals and we know just another little supplier that would be able to help…

Tags: China · Natural Gas

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