(Yicai Global) March 6 -- China will step up building natural gas storage facilities to ensure future supply and avoid energy shortage caused by high demand during the winter, said He Lifeng, chairman of China's National Development and Reform Commission, the country's top macro-economic planner.

China's cities will ramp up construction of such facilities to make sure they hold at least 10 days of gas supply, He said during a press conference along the sidelines of the first session of 13th National People's Congress in Beijing today. Shanghai holds the highest natural gas storage capacity with 15 days of supply, he added.

The chairman of the country's top economic body also called on gas suppliers to step up construction of gas storage facilities. The central government will take measures to push forward the development of supply capacity and pipeline construction in line with the market demand and laws so that the gas supply capacity of major gas suppliers could reach 10 percent of the contracted gas supply, He added.

China will also speed up construction of liquefied natural gas, or LNG, storage facilities, and form a nationwide supply network as soon as possible, He emphasized.

Energy Reform

In terms of sales of natural gas, China will further promote institutional reform, including price reform. As the gas prices for commercial and household uses are quite different, it is necessary to push forward the reform, He suggested. The regulator would control commercial use to ensure household use of natural gas in extreme cases and weather conditions, He noted.

China will make increased efforts, including building an adjustment mechanism of about 200 million cubic meters, in which 100 million cubic meters will be provided mainly via major gas suppliers, including China National Petroleum Co., China Petrochemical Co., and China National Offshore Oil Co., and the local governments will be working on providing the remaining 100 million cubic meters, He said.

China's natural gas supply reached 237.3 billion cubic meters last year, an increase of more than 30 billion cubic meters over the previous year. This year's demand is expected to further increase. China needs to increase natural gas production. It is also necessary to vigorously organize research on the production of tight gas and shale gas, and study on the technology of coal-to-gas production, He said.

China will also sign contracts with neighboring countries, including Central Asia, Russia and the natural gas exporters along the Pacific coast, for long-term supply, He added.