The Chinese Energy Behemoth: LNG Development & Investment Opportunities
China’s pressing need for power production has led to the diversification of its energy sources. To support the fast-developing nation with a population of 1.1 billion people, 280 Chinese cities are now using natural gas for domestic, commercial and industrial purposes.
One-third of China’s natural gas is imported, of which 18% is LNG. Natural Gas remains the fastest growing sector, exceeding 60% growth. Approximately 55,000km of pipelines will be built between 2011 and 2015.
China’s existing pipelines exceed 35,000km, making China the country with the world’s longest pipelines. It is also where 50% of the world’s pipelines are.
However, the country still struggles to overcome several obstacles arising from issues such as low networking pipelines and insufficient lines, low transportation efficiency, and legged construction of peak load adjusting facilities. 10 LNG terminals are either under construction currently or are planned to be built in the next five years. These terminals will have 2,560,000 cubic meters of storage capacity, located mainly in Fujian, Shanghai, Shandong, and Liaoning. PetroChina has plans to construct ten gas storage facilities between 2011 and 2015, with a capacity of 22.4 billion cubic meters.
The Chinese government plays a central role in encouraging the use of LNG. In order to form the “interconnected pipeline network,” it is on the path to revise and improve existing laws and policies to make them friendlier to such developments. The main clauses are to establish a joint management system and effective government monitoring. In addition, there is a multiple investment system, open access to gas facilities, and an independent industry monitoring system.
In particular, the Chinese government pushes for shale gas opportunities.
“The Chinese government encourages exploration and development of shale gas,” Tongxin Yao, President of China Power Petrochemical International Corporation, said at the World LNG Series Asia Pacific Summit. “There is an increase in middle and downstream gas.”
Yao added that opportunities exist in areas where monopolies haven’t been established. With rapid urbanization, future gas demand will surge. Investors should consider entering downstream business, and focus on cities, counties and towns.
China’s long-term growth and energy strategy is to use low carbon green energy, Yao reiterated.