The Chinese oil and gas midstream market is expected to witness a CAGR of more than 3.04% during the forecast period of 2020 – 2025. Factors, such as increasing production and consumption of natural gas, are expected to boost the demand for the Chinese oil and gas midstream market during the forecast period. However, the decreasing production of oil in the country has caused concern in the sector, due to the possible decommissioning of pipes during the forecast period.

  • China has actively sought to improve the integration of the country’s domestic oil pipeline network, as well as to establish international oil pipeline connections with neighboring countries to diversify oil import routes. Large pipelines with Russia and Myanmar are testaments of diversification.
  • The Chinese government’s initiative to increase the production of oil and gas in the country is expected to be an opportunity for the players in the midstream sector as new production fields would open new avenues of development of oil and gas pipelines.
  • The increasing oil and gas consumption, coupled with the increase in production of gas in the country, is expected to drive the market. New LNG Terminals have also been proposed, which are expected to increase the growth in the sector.



Key Market Trends

Pipeline Sector to Witness a Significant Growth

  • In 2019, a proposed pipeline was fully constructed, between the Russian Federation and China through Siberia. Power of Siberia, which is the name of the project, was brought into operation, and the first-ever pipeline supplies of Russian gas to China were launched.
  • In 2019, the total capacity of gas pipelines in the country is more than 2,786,675 barrels of oil equivalent per day. West-East Gas pipeline 2 with a length of 5656 miles (9102 km) and a capacity of 30 billion cubic meters per year is the largest in the country.
  • Consumption of natural gas increased in the country, by 9.79%, year on year, from 167.4 million metric ton of oil equivalent (mtoe), in 2015 to 243.3 mtoe, in 2018. Production of gas in China increased significantly by 4.45%, year on year, from 116.7 million ton oil equivalent, in 2015 to 138.9 million metric ton oil equivalent, in 2018. The increasing consumption incentivizes the investors for the required increase in capacity and boosts the investments in the future, thereby, increasing the growth in the industry.
  • Hence, pipeline capacity is expected to increase slightly during the forecast period, due to the increasing production of gas and rising investment in the sector.



Increasing Oil and Gas Consumption to Drive the Market

  • In 2018, Russia’s new East Siberian oil fields became a source of China crude oil imports. Russian state-owned company, Transneft, laid the Eastern Siberia-Pacific Ocean Pipeline, extending more than 3,000 miles from the Russian city of Taishet to the Pacific Coast.
  • In 2019, the total capacity of oil pipelines in the country was aproximately 3,671,840 barrels per day. Western Crude Oil pipeline with a length of 2485 miles (4000 km) and a capacity of 400,000 barrels per day is the largest pipeline in the country.
  • The oil production decreased in the country, by 1.3%, from 3846 thousand barrels per day (kbpd), in 2017 to 3798 kbpd, in 2018. Oil consumption in the country increased, by 5.3%, from 12840 thousand barrels per day (kbpd), in 2017 to 13525 kbpd, in 2018. The increase in consumption of oil incentivizes the investors for the required increase in capacity and increases the investments in the future, thereby, boosting growth in the industry.
  • The China oil and gas midstream industry is expected to grow slightly in the forecast period due to the expected massive increase in the consumption of oil and natural gas in the country.



Competitive Landscape

The China oil and gas midstream market is moderately consolidated. The major companies include China National Petroleum Corporation, POSCO, PJSC Gazprom, PJSC Transneft, and China Petroleum & Chemical Corporation.

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