In recent years, China's demand for natural gas has maintained double-digit high growth, but last year's demand slowed to just 8.9% growth, marking the lowest growth in 10 years, chiefly due to the impact of low oil prices, triggering risks of "inverse substitution" in application of natural gas in industry and cars, Beijing-based Economic Information Daily reports.

Over the past half a year, international oil prices have dropped significantly, with natural gas' economic advantage largely discounted and whose prices have become even higher than that of liquefied petroleum gas (LPG) in certain regions, triggering the "inverse substitution" phenomenon.

According the latest research by the international energy research agency ICIS, currently in the eastern Guangdong region, LPG has replaced about 50% of the natural gas market, while in the industry end of Guangxi, Jiangsu, Zhejiang, Fujian, Shandong and Hunan, the inverse substitution phenomenon has been more apparent than in the past.

The pricing comparison at present between natural gas and LPG is 1 to 0.91.

Quite a few industry clients have owned both gas and fuel facilities. Now that fuel is cheaper, many enterprises have begun using fuel facilities instead, said Xi Jing, natural gas analyst at SCI International. Quite a few Japanese power enterprises have given up using natural gas, and turned to use "more economic" fuel-fired power generation.

In the auto field, the impact of low oil prices on natural gas cars has been even more apparent, with the promotion of natural gas heavy trucks facing setbacks.

Last year, sales of natural gas heavy trucks fell 13% from a year earlier, as the fuel cost of natural gas heavy trucks is higher than normal heavy trucks, with the former's cost for running 100 kilometers at about 168 yuan (US$27) against the latter's 160 yuan (US$25).

According to SCI, China's imported fuel oil prices have dropped 50% from its peak last year, while LPG prices have fallen 20%-30%. Xi expects natural gas prices to face further adjustments in April or May, probably showing price hikes in gas stocks, but price cuts in incremental gas. Yet as China's gas stocks are about twice that of incremental gas in volume, overall, gas prices probably will continue to rise slightly. This means that natural gas will continue to face risks of inverse substitution.