China's Pipeline Project Running Short on Gas
Despite not yet being completed, China's Second East-West Gas Transmission Pipeline project, the world's longest natural gas pipeline, is already suffering from an insufficient supply stream.
Imports of natural gas from central Asia have declined. To meet domestic consumption demands, China National Petroleum has been forced to sharply cut the supply of natural gas for industrial use, a market expert said.
The oil company has directed one of its oil fields to allocate almost 1 million cubic meters per day to liquefied natural gas factories in cities along the Shaanxi-Beijing gas pipeline.
According to media reports, the operation rate of the company's liquefied natural gas facilities has dropped to 60% since Dec. 12 and could decline further.
China National Petroleum has directed its main oil fields to expand production and reduce the ratio of sales for industrial use.
The state petroleum company has asked China Petroleum and Chemical (Sinopec) to increase its gas supplies and sales in eastern parts of China to ease the petroleum provider's pressure to supply gas to those areas.
The national petroleum company has begun construction of the C section of the natural gas pipeline in central Asia.
An expert said, however, that since the second pipeline has been put into production, the pipeline's supply of gas has not met the monthly supply volume level set by a regional committee. "In 2011, Turkmenistan promised to offer 17 billion cubic meters of natural gas, but there is still a shortfall of 13 billion cubic meters," he noted.
The Second East-West Gas Transmission Pipeline, which passes through three central Asian countries — Turkmenistan, Uzbekistan and Kazakhstan — was put into production during the 2008 financial crisis, seeking to supply gas to 15 provinces in China. Around 100 billion yuan (US$15.75 billion) has been invested in the project.
Energy independence has been a difficult issue for China. According to the government, China's natural gas consumption is expected to reach 260 billion square meters by 2015, while the country can only produce 140 billion square meters domestically.
Some experts have attributed Turkmenistan's inadequate supply of gas to geopolitical factors.
According to international regulations, energy suppliers who fail to offer sufficient volume are subject to compensation for the shortfall in supply.
Insufficient imports have prompted China to strain its domestic resources, resulting in the shortening of the life expectancies of domestic gas fields.
An executive at an international gas company in China suggested that in the future, the country should enlarge imports of natural gas while also establishing a network of domestic infrastructure to secure a sufficient supply.
Source: Want China Times