Page 8 - AsiaElec Week 41

AsiaElec COMMENTARY AsiaElec

many businesses to temporarily close as a result.
Several years of investment in new domes- Projects and the pandemic
tic pipeline capacity, new LNG and piped gas Of the eight Chinese LNG projects originally
import capacity as well as the development of slated to start up this year, six have been delayed
underground gas storage capacity, however, have till next year and the status of the remaining
convinced Beijing that the gas supply chain will two remains uncertain. Infrastructure projects
not break this time around. across the country have been delayed this owing
to the pandemic.
Green goals Argus Media reported that four greenfield
The ministry made it clear that it wanted to meet projects in Zhejiang, Jiangsu and Guangdong
this year’s air pollution targets set out in the cen- provinces had been delayed alongside expan-
tral government’s three-year Blue Sky Defence sion projects at the Qidong and Qingdao ter-
action plan unveiled in July 2018. minals. The pandemic may have also delayed
S&P Global Platts Analytics lead analyst for the Tangshan LNG phase 3 and Shanghai LNG
global coal Matthew Boyle suggested, however, phase 2 projects.
that colder-than-expected winter temperatures If these last two projects fail to come on
could see coal and gas being used for heating in stream this year, then the country’s import
tandem. capacity will be limited to around 19.4mn tonnes
China’s push to expand gas’ share of the of LNG in the fourth quarter and 18.9mn tonnes
energy mix saw the cleaner burning fuel in the first three month of 2021.
account for 8.1% of primary energy consump- Despite such considerations, China remains
tion in 2019, with Beijing targeting a 15% share in a relatively robust supply position, having
by 2030. The Asian economic giant consumed trimmed its piped gas imports between Janu-
308bn cubic metres of gas last year, while ary and August in order to facilitate a 10.3% y/y
importing 127.65 bcm. increase in LNG purchases. This trend could
Overall gas use is expected to rise 4-6% this continue in the final quarter, with IHS Markit
year, leading to a 10% year-on-year growth in senior analyst Lu Xiao saying: “[Fourth-quar-
LNG imports to 65mn-67mn tonnes, according ter] imports will remain robust ... as LNG is both
to a recent Reuters report, citing analysts and more competitive and flexible versus pipeline
Chinese traders. If this plays out and the trend gas, despite a recent spot price spike.”
continues over the coming years, China could Chinese buyers have had the luxury to choose
overtake Japan to become the world’s leading between more commercially attractive supplies
LNG importer by 2022. in recent months, owing to both the country’s
“After taking a brief hit earlier this year due growing import options and the global gas sup-
to the [coronavirus] COVID-19 pandemic, Chi- ply glut.
na’s gas demand recovered faster than expected, The country has built more import capacity,
driven mostly by the industrial sector that has underground storage and domestic transporta-
recovered to 2019 levels since May,” Reuters tion infrastructure in preparation of anther coal
quoted FGE analyst Alicia Wee as saying. conversion drive. This, coupled with the fact
Yet while imports have picked up, the coun- that Beijing is prepared to lean on coal should
try’s ability to lean on its LNG terminals to the need arise, will likely allow China to survive
respond to winter demand surges is in question, the winter without a repeat of the supply pains
thanks to a series of regasification project delays. from 2017-2018.™

P8 www. NEWSBASE .com Week 41 14•October•2020