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China diversifies natural gas supply

By Li Xuanmin and Song Lin (Global Times)    10:54, November 18, 2019
China diversifies natural gas supply
Workers check the pipeline at a compressor station along the West-to-east Gas Pipeline. (Du Yanfei/People's Daily Online)

Construction of terminals for US LNG depends on trade talks: experts

China is overcoming tight natural gas supplies for the winter season by diversifying overseas suppliers and expanding domestic production, and it has no need to seek supplies from the US, experts said on Sunday.

As a result, the suspended construction of terminals to receive shipments of US liquefied natural gas (LNG) may only be resumed if the trade talks go well.

In recent years, with continued efforts to reduce air pollution and replace coal with gas, China's natural gas consumption has increased rapidly and the demand for imported fuel has continued to rise.

China's natural gas supply will be stable this year, and there won't be a repeat of last year's situation where insufficient storage capacity meant shortages and a freezing winter for some residents in northern China, industry insiders said.

Jin Lei, an associate professor at the China University of Petroleum, has forecast that there may even be a surplus due to a hike in LNG imports and a predicted warmer winter.

China's natural gas imports mainly come from several sources. To the southwest, natural gas is imported via the China-Myanmar oil and gas pipeline as well as from central Asian countries including Turkmenistan and Kazakhstan. LNG from countries such as Australia, Qatar and the US comes to China by sea, according to a report by the Economic Daily.

Another source is from Russia via the China-Russia east-route natural gas pipeline, which Jin said could be a new growth point to boost China's natural gas supply.

"The opening of the route is of strategic important to China amid the ongoing trade war with the US and a complex international environment, in which uncertainties over maritime LNG shipments have multiplied. Securing supply from Russia mitigates such risks," Jin told the Global Times on Sunday.

In 2018, imports from the US represented about 4 percent of China's total natural gas imports, with only 1 percent coming from Russia, according to data provided by Jin.

Any gaps in imports left by the US will be filled by Russian gas, industry insiders said.

Last year, China halted the construction of LNG terminals for receiving US natural gas, said industry insiders. The country will only resume the projects if trade talks between the world's two largest economies reach a consensus.

"The US is in the process of transforming itself from the world's biggest importer of natural gas and oil into one of the world's largest energy exporters. It has longed for the lion's share in China's fast-growing natural gas market to push forward the process. That hope seems difficult to realize now," Jin said.

In 2018, China consumed 280 billion cubic meters (bcm) of natural gas. It is expected that the China-Russia gas pipeline will provide China with 38 bcm from Russia annually, according to the Xinhua News Agency.

China could use tariffs on US natural gas imports as a bargaining chip on the trade table, Chen Zhanming, an associate professor of the Renmin University of China, told the Global Times on Sunday.

In addition to diversifying overseas suppliers, China discovered another 100 bcm in gas reserves in Tarim Basin, Northwest China's XinjiangUyghur Autonomous Region, according to the news site of China's state-owned energy giant, China National Petroleum Corp, in October.

The new discovery will guarantee domestic gas supplies, said the report.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Liang Jun, Bianji)

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