In the wake of rapid development in natural gas chemical projects across China's major gas-producing regions, Shaanxi Province — a historically gas-rich area — has had to reassess its long-term strategy for natural gas utilization. On February 9, a report from the Shaanxi Provincial Development and Reform Commission revealed that during the "11th Five-Year Plan" period, the province decided not to launch any new natural gas-based chemical projects. All five proposed initiatives have now been put on hold, marking a significant shift in policy.
For years, Shaanxi had positioned natural gas chemical projects as a key driver of economic growth. However, recent challenges in gas supply have forced a re-evaluation. Last October, a nationwide shortage of natural gas hit several regions, including Shaanxi, which faced intense competition for available resources. Despite having proven reserves of 744.7 billion cubic meters, the Changqing Oilfield — one of the country's largest gas producers — is operating at full capacity, with production rates increasing by over 10% annually. This has led to pressure on local industries, many of which have had to reduce their gas consumption.
Faced with these realities, Shaanxi has revised its approach. The province plans to invest RMB 1.8 billion in a 520,000-ton-per-year methanol project in Xianyang City. However, part of this initiative will be adjusted: a 200,000-ton methanol plant previously planned to use natural gas will instead switch to coal or be abandoned altogether. Similarly, other projects at the Yulin Energy and Heavy Chemical Industry Base — including 25,000 tons of 1,4-butanediol, 150,000 tons of acetic acid, coal tar hydrogen production, and an expansion of Lutianhua’s 200,000-ton methanol plant — have either been canceled or re-routed to alternative raw materials.
Additionally, plans for clean vehicle development in Xi’an are being reconsidered. The city will now focus on promoting natural gas vehicles based on national gas allocation levels. Construction of new gas stations may slow down, while the promotion of methanol, ethanol, and dimethyl ether fuels is expected to accelerate, reducing reliance on natural gas.
This strategic adjustment means that all five natural gas chemical projects originally planned for the "11th Five-Year Plan" period have been suspended, resulting in a reduction of over 5 billion yuan in investment.
Experts note that the high calorific value and low pollution of natural gas have made it a preferred energy source. In recent years, neighboring provinces with access to gas resources have also sought to develop similar projects. However, Zhu Hongren, deputy director of the National Development and Reform Commission’s Economic Operation Bureau, has emphasized that natural gas supply is unlikely to grow significantly in the short term. New chemical projects must be evaluated carefully, taking into account regional gas development, supply security, and future demand trends.
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