China’s decarbonisation goals

China’s aim to decarbonise its energy mix and tackle pollution requires importing a lot more gas. To achieve this, China requires substantial investment in LNG terminals, gas storage, and for pipeline capacity.
This was the view put forward DNV GL, which added that as Chinese gas imports increase the safety challenges for pipeline operators will also rise. 

In the first half of 2018, China imported a record 24 mn tonnes of LNG – 50 percent more than in the same period in 2017. Significant growth is still to come as, at present, gas accounts for only 7 percent of China’s energy mix (the global average is 22 percent, said DNV GL). 

The Chinese government is targeting increases to take that share to 10 percent by 2020, and as much as 15 percent by 2030.

While China plans to boost domestic gas production, it also needs more LNG and piped gas imports. DNV GL’s Energy Transition Outlook model expects imports to meet more than 70 percent of gas consumption in Greater China by 2040.

“The increase in demand from China has swiftly taken off the new LNG capacity coming onstream from Australia. Going forward, the large shale-gas-sourced liquefaction projects in North America and capacity expansion in Middle East will help meet the expected increase in demand,” said Hans Kristian Danielsen, vice president, marketing and sales director, DNV GL – Oil & Gas.  

Investment required
DNV GL’s Industry Outlook 2019 research also shows that 61  percent of senior industry professionals surveyed in China say more investment is needed in LNG and pipeline infrastructure. 18 LNG import terminals were operational in 2018, according to Gulf Publishing’s Energy Web Atlas, with a total installed  capacity of nearly 60 mn tonnes per annum (mtpa). Seven were in the process of being expanded.

Another seven such terminals will add nearly 19 mtpa capacity by the early 2020s, with more expected by mid-decade. In addition, China is adding gas storage capacity and chartering LNG carriers in order to limit its exposure to seasonal shifts in LNG prices.  

According to BP’s Energy Outlook 2019, around half of the additional gas imports that China will require will need to be met by additional pipeline capacity from Russia and other CIS countries, with the rest coming from LNG. Plans are also under way to create a state-owned national pipeline company to operate all oil and gas pipeline networks. 

Arthur Stoddart, regional manager, China, Korea and Japan, DNV GL – Oil & Gas, said: “China’s plans for LNG facilities and gas pipelines are an opportunity to become leading edge in areas such as asset integrity and safety by applying learnings from expansion projects worldwide.”

This story was published in the CapProCon e-newsletter. To learn more, click here.

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