China, the world’s largest energy consumer, saw its natural gas output fall 2 percent in May from the same period a year earlier, official data showed last week. Reuters said it’s the second straight month of declines as the market expects Beijing to announce an additional price cut for the fuel in the coming months to help resuscitate slowing demand.

For the month of April, output dropped 2.9 percent year-on-year to 9.4 billion cubic meters (bcm), the lowest level in outright volumes since last July. Media said that such drops in output are rare. For May, production was at 9.9 bcm. According to China’s National Statistical Bureau (NSB), total output in the first five months of 2015 climbed 2.1 percent from the same period the year before to 53.2 bcm.

One reason that demand has fallen can be attributed to energy planners in Beijing, who set the price for gas, using oil as a pricing benchmark. Though there has been a plunge in global oil prices of around 40 percent in the past 52 weeks, Beijing didn’t lower natural gas prices until April. Beijing may move to cut so-called city-gate, or wholesale gas prices again in the coming months to lift demand, the Reuters report added, citing industry sources. The consumption drop is also problematic for Beijing, since the country wants to boost natural gas usage, the cleanest burning hydrocarbon, to fight record levels of air pollution, particularly in Beijing and other major urban centers in China.

This disclosure comes as the developed world’s energy watchdog, the Paris-based International Energy Agency (IEA), and a major energy consultancy, Wood Mackenzie, both released new forecasts for future Chinese gas demand. The reports, however, draw different conclusions. The IEA, in its 2015 Medium-Term Gas Market Report, said last week that China would lead Asia’s gas demand over the next five years, with consumption rising 10 percent a year. The report added that lower prices will feed a pick-up in global natural gas demand over the next five years following a marked slowdown in 2013 and 2014.

The Wood Mackenzie report released on June 10, however, said China can expect weaker gas demand and oversupply until 2017, adding that China’s state-owned national oil companies (NOCs) are assessing how best to optimize their diverse supply portfolios as gas demand disappoints, resulting in an oversupplied market with weaker prices. The consultancy added that gas demand growth in China has been reduced significantly and demand is now expected to reach around 12.7 trillion cubic feet (tcf) — 360 bcm and 19.77 tcf (560 bcm) in 2020 and 2030, respectively, compared to 14.83 tcf (420 bcm) and 22.59 tcf (640 bcm) as previously forecasted.

“Short-term drivers include low oil prices and high domestic gas prices, reversal of environmental policies, competition from coal and hydro, and warmer winter weather. Structural factors include the switch from industrial production to the service sector as a driver of economic growth,” said Gavin Thompson, Wood Mackenzie’s principal gas consultant.

However, there are also other reasons for decreased gas demand in China, namely the slowdown of economic growth in the country. Though China’s economic growth has fallen from around 7.5 percent to 7 percent (still robust compared to the OECD) its industrial performance is taking a hit. In late May, Zhou Dadi, chairman of the China Energy Research Association, said that this industrial sluggishness has “really changed demand.”

“The whole energy balance is facing some very big changes,” he said. “Incremental energy demand is significantly lower than what we expected.” However, even if China lowers the price of natural gas, which it will likely do, the slowdown in the Chinese economy will continue to result in softer natural gas demand, having reverberations across the entire energy landscape, ranging from its massive natural gas pipeline imports, still the major source of gas imports into China, to new LNG supply deals, even to its fledgling shale gas development, which is still struggling to get off the ground due to technological and geological challenges.

On May 28, The Globe and Mail said that China is expected to grow at its lowest pace in decades, a “new normal” for the economy that is becoming a new normal for energy, too. If so, then its unwelcome  news for new LNG projects that are coming on-stream in the next few years, mostly from the US and Australia, that need strong Chinese gas demand, in addition to strong demand from other Asia-Pacific countries, to offset an impending glut of LNG supply entering the market.