Page 9 - AsianOil Week 24

AsianOil
EAST ASIA AsianOil
Chinese President Xi Jinping has prioritised implementing legislation to improve urban air quality in cities
deal it struck with China National Petroleum Corp. (CNPC) in 2014.
While the system is likely to deliver just 5-8bn cm per year initially, it could reach its design capacity of 38bn cm per year within three to ve years. Also known as the eastern route, the ambitious 3,000-km long pipeline will extend from gas elds in eastern Siberia through the border city of Blagoveshchensk to the border with north-eastern China. e pipeline not only represents a new major export route for Russian gas to the Asia-Paci c region but also Russia’s largest gas sales and purchase agreement to date. e deal, which stipulates 38bn cm per year of gas supplies over a 30-year period, is estimated to be worth more than US$400 billion.
Given that the Chinese State Council’s Development Research Centre has projected that domestic consumption will soar to 425bn cm in 2025, there is good reason for Beijing to seek stronger energy ties with Moscow. As such, talks are progressing on Power of Siberia 2. is proposed pipeline would stretch 2,800 km from the Nadym and Urengoy elds in western Siberia to China’s northwestern Xin- jiang region, where it would tie up with Pet- roChina’s West-East Pipeline (WEP) network, which extends to the east coast.
While new pipeline supplies will certainly feed booming demand in the country’s northern provinces, demand for LNG and subsequently import terminals will continue to grow.
What next
LNG import capacity allows the country to continue with its policy drive of shi ing away from coal in the country’s urban and indus- trial coastal centres.
It provides a exibility of supply that mul- ti-year pipeline negotiations and construction
projects simply do not. The government has been criticised heavily for not ensuring su - cient supplies of gas during past winters when surging demand has outpaced local supply lev- els, leaving many – including schools – without su cient heat.
Chinese President Xi Jinping has prior- itised implementing legislation to improve urban air quality in cities and maintain the country’s climate change pledges under the Paris Agreement. e president has overseen the switch of 4.8 million Chinese households from coal to gas in heating in 2018, up from 4 million in 2017.
is pace of conversion has to continue if the country is to expand the cleaner-burning fuel’s share of the primary energy mix to 15% by 2030, from around 7% in 2017.
With that in mind, additional pipeline sup- plies will simply help Chinese energy planners overcome a major logistics issue in the form of insu cient pipeline connectivity in the country. Greater pipeline supply from Russia and Central Asia will feed economic growth and energy tran- sition e orts in the country’s landlocked north- ern and western regions. As pipeline supply rises pressure will ease on the country’s gas majors to ensure that supplies from coastal LNG deliveries reach more remote locations, either by truck or via new pipelines.
ere are risks to China’s move to gas imports, particularly in the context of worsening relations with some members of the global community, most obviously the US. Domestic production can go some way to shoring up the country’s requirements but shale gas hopes have failed to deliver. Given these political challenges, Chinese importers will seek to tie up deals with a range of suppliers in order to moderate risks – welcome news to new non-US LNG producers. ™
Week 24 19•June•2019 w w w . N E W S B A S E . c o m
P9