Published on June 25, 2014

The rising consumption has encouraged reliance on unconventional energy sources, which is expected to impact China's petrochemical and chemical sectors.

Increasing use of natural or shale gas can help China boost its low-carbon economy. Natural gas could be used to make synthetic ammonia and methanol, which is economically beneficial than those produced by coal and petroleum. China has access to nearly 26 trillion cubic metres of recoverable shale gas. However only technology can assure any success in this sector- China has to promote shale gas exploration, improve exploration technologies etc.

The energy sector is also looking into coal bed methane (CBM) reserves to bridge the gap between supply and demand of natural gas. The CBM sector is believed to be better equipped at meeting the demands of the chemical sector.

Overcapacity continues to plague the petrochemical industry. The level of demand is likely to be insufficient to take in the capacity expansions.        

State owned firms are establishinh a large number of naphtha-based units.

The high costs of oil imports has pushed the government to rely on coal as feedstock for the petrochemicals industry. The coal-to-olefins technology will account for a third to 16 mtpa rise in China's ethylene capacity by 2017. The high prices of international crude oil has reduced the cost effectiveness of ethylene produced from naphtha. Thus, China is investing heavily in coal based projects