CNPC plans to consolidate its billion-dollar underground gas storage assets into one business to expedite an infrastructure upgrade it needs to avert a long-term supply crunch during peak winter heating season, company officials said.

Underground facilities scattered across different businesses, like natural gas marketing and pipeline units, are expected to be transferred to CNPC’s exploration and production (E&P) department, senior company officials briefed on the plan said. CNPC is the parent of top Asian oil and gas producer PetroChina.

China, the world’s third-largest gas consumer, is facing a shortage of underground storage amid the country’s drive to boost use of natural gas in order to cut pollution from coal.

Currently its underground storages can only meet 5 percent of total gas used versus 20 percent in the United States, leaving China vulnerable to the kind of supply crunch it suffered early this year.

Freezing weather and a sweeping government campaign to switch millions of homes and businesses from coal to gas led to supply cuts at some industrial users as authorities prioritized households.

CNPC produces some 70 percent of China’s domestic gas, and owns and operates most of the country’s underground gas storage (UGS) units.

“The purpose of letting E&P take care of UGS business is to speed up building the storage, as the upstream division has the technical know-how and also operates the gas fields that are main sites to build the storage (units),” said one company official.

A second official said the plan could be announced as soon as in the coming weeks.

China now operates 25 facilities with total designed working capacity of 18.9 billion cubic metres (bcm) and working volume of 11.7 bcm. PetroChina built 23 of them, with the remaining two built by Sinopec.

(SD-Agencies)