China’s natural gas purchase ramps up amid the ongoing coal shortage, the world’s energy at risk

China’s central government is ensuring to reserve a sufficient stock of natural gas to support the country’s winter needs and meet the energy demand in the Beijing Winter Olympics to be held in February 2022.

The government’s action follows the latest forecasts from China’s National Energy Administration which has predicted the demand for natural gas in the running year to exceed the last year’s demand and reach around 370 billion cubic meters. This prediction has rattled the Liquified Natural Gas market which is already marred with record-high natural gas prices.

To supplement its urgent energy requirements, China, in addition to natural gas, is eyeing the purchase of abundant amounts of coal at any cost. China, at the moment, is running with terribly low stockpiles of coal which have forced the government to order certain Chinese provinces housing the majority of the petrochemical production units to curtail plant operations.

China’s frantic attempts to grab as much amount of overseas energy as possible amidst all the upheaval is sending ripples through international countries. Europe’s struggle with natural gas and coal prices has not ended yet. The low output from renewable power and shutdowns of many nuclear reactors has surged the demand for coal in the European region. Australia, on the other hand, has witnessed a 250% hike in coal process in a year. India will also be facing the coal crisis soon if it is not able to fill up its already low running reserves with overseas supply.

Natural gas and coal, both obtained from fossil fuels, are sources of energy that play a vital role in the running of all industrial activities, transports, and households. They are primarily used for electricity generation and heating applications among their other functions. Natural gas is comparatively a cleaner fuel owing to its 50% less carbon footprint than coal.

As per ChemAnalyst, the global natural gas market is experiencing major supply-demand friction with many regions facing alarmingly high natural gas prices. With limited domestic inventories of coal and most of the regions of the world driving towards the winter season, the pressure on natural gas demand has surmounted to a new level. The situation is not likely to get cooled down in the running year. The government could find itself in a worse position for economies that cannot afford natural gas and will have to shut down their major operations. An imminent impact of the energy shortage could come in the form of several manufacturers who might get forced out of business.