China suffers intensified gas shortages (2)

14:44, January 06, 2010      

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According to Xu, China produces around 70-80 billion tons of LNG a year, insufficient to meet domestic demand of at least 100-120 billion tons this year.

Zhou Shijian, a senior researcher with the Institute of Sino-US Relations at Tsinghua University, said China's quest for gas and other energy sources from abroad has been tricky.

"Gas and oil resources that are easily exploited have been grabbed by Western countries, which left only crumbs for China," he said.

When China seeks energy cooperation with countries like Sudan and Iran, it always faces pressure from the West, and China's intention to cooperate with Western countries also arouses suspicion from their Western counterparts, Zhou said.

Xu said that Chinese companies lack experience in purchasing energy from abroad, with both "success and defeat" in overseas energy cooperation in recent years.

In 2002, China National Petroleum Corp (CNPC), the parent company of PetroChina, lost to its Russian rivals Sibneft and TNK-BP in a bid for stocks sold by Slavneft due to interference by the Russian government, reluctant to allow China to hold stakes in its large oil and gas companies.

However, Liu Yijun, a professor of energy economy at China University of Petroleum, told the Global Times that the deal's end won't have a major impact on China's natural gas imports and use.

"The two countries only reached an initial agreement … the deal's lapse is common business practice. There is no need for speculation and worry," he said, adding that an annual import volume of up to three million tons is only a minor part of China's natural gas demand of more than 100 billion tons per year.

China has long sought to secure natural gas from multiple sources instead of any one country. PetroChina and Russia's Gazprom Export recently agreed the basic terms of Russian natural gas supplies to China.

A massive 1,833-kilometer natural gas pipeline that connects Turkmenistan, Uzbekistan and Kazakhstan opened last month, with experts optimistic about its role in filling the natural-gas gap.

Gas-rich Qatar has been diverting part of its supplies from the US market to China, and expects China to be one of its biggest consumers, according to a report by the Financial Times in October.

Liu added there is a possible reason for the termination of the contract, as the Australia-based company adjusts its investment strategies and hopes that China could make changes to the contract.

Relations between Australia and China were strained in July when four employees of mining giant Rio Tinto were detained in Shanghai on suspicion of espionage and stealing state secrets.

Source: Global Times
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