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Construction kicks off on Longkou LNG import plant
PROJECTS & COMPANIES
CHINA’S National Petroleum and Natural Gas Pipeline Network Group (PipeChina) said on May 16 that it had broken ground on an LNG import terminal that is being built in the city of Longkou in Yantai, Shandong Province. State- owned PipeChina is building the facility in part- nership with Nanshan Group.
The first phase of the plant is due to enter ser- vice in 2023, and will have a capacity of 5mn tonnes per year. The terminal will be expanded, and will ultimately have the capacity to process 20mn tpy of LNG. It is designed to comprise 20 gas storage tanks, each with a capacity of 220,000 cubic metres, by the time it has been fully expanded.
According to PipeChina, this will translate into 28bn cubic metres per year of gas that will be supplied by the terminal to regions around the Bohai Sea. The company says that as well as providing a continuous gas supply, it expects the facility to help enhance peak shaving capac- ity and offer emergency storage. The project is expected to cost around $5bn in total to develop, and is anticipated to help Shandong Province cut its carbon dioxide (CO2) emissions by 32mn tpy.
This is the first energy infrastructure project the company has participated in building since its launch in December 2019. Pipeline assets operated by China’s three national oil compa- nies (NOCs) – China National Offshore Oil Corp. (CNOOC), China National Petroleum Corp. (CNPC) and Sinopec – were combined into PipeChina that month. The move was aimed at improving efficiency and guaranteeing sup- plies. Indeed, the Longkou terminal was previ- ously being developed by CNOOC before being handed over to PipeChina.
Looking ahead, PipeChina is expected to par- ticipate in more new projects, alongside the ones it inherited from the NOCs.
“The [coronavirus] COVID-19 pandemic might delay work on PipeChina’s new projects, but in the second half of 2020, PipeChina will likelybuildmoreprojects,”thedeanoftheChina Institute for Studies in Energy Policy at Xiamen University, Lin Boqiang, was quoted by the Global Times as saying.
Additional liquefaction capacity is being developed elsewhere in Yantai.™
China’s oil demand recovery cannot stop gas investment push
PERFORMANCE
CHINA’S oil demand may have reportedly bounced back to pre-coronavirus (COVID-19) levels, but it appears that the country’s energy majors intend to prioritise investment in natural gas projects in the year ahead.
National gasoline and diesel consumption had fully recovered after crashing 20% year on year in February, Bloomberg reported on May 17, quoting unnamed sources with “inside knowledge of the country’s energy industry”. They cited the reopening of factories and com- muters’ preference for driving over public trans- port (owing to lingering concerns over viral transmission) as behind the recovery.
China imported 40.43mn tonnes (9.88mn barrels per day) of oil in April, according to the General Administration of Customs (GAC). This was down on the 10.68mn bpd shipped in during April 2019, but was up on the 9.72mn bpd imported in March.
Despite the recovery in oil demand, it appears that China’s state-run energy developers are
more interested in boosting natural gas pro- duction following budget cuts announced last month.
The Big Three – PetroChina, CNOOC Ltd and Sinopec – are expected to expand their nat- ural gas production by 5% or more this year from 173.6bn cubic metres in 2019, Reuters reported last week citing unnamed company officials and industry analysts. Each of the three announced spending cuts of between 20% and 30% in April.
The newswire quoted a PetroChina execu- tive at the Changqing field in the Ordos Basin as saying gas production was tipped to climb 2.2% y/y in 2020 to a record 41.4 bcm. The company intends to launch nearly 1,000 production wells this year.
“The message across PetroChina is to accel- erate productions from new wells and [enhance] recoveries at older wells,” the executive added.
Shale gas developments in Sichuan Province are also expected to pick up this year, with Reu- ters noting that developers would make the most
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