Analyst Alexander Frolov — why China will not be able to do without Russian gas
“Soon, cheap gas, from Australia and the USA, as well as from Central Asia fill the market of China.” “In an extreme case, China can provide itself with shale gas, which she has trillions of cubic feet. Russian gas is not necessary.” Please forgive me if I missed some masters theses experts who explain that the contact with China is harmful, unprofitable and futile. We remind our readers about why China and why China we.
Ten years ago, China extracted some 60 billion cubic meters of natural gas. It was a little less than was required at the time of the country, including Hong Kong. Last year, according to BP, China produced 138 billion cubic meters of gas. The tremendous growth. But the country needs to place were not. As expected plans for the XII five year plan (2011-2015), gas consumption in China has increased to 200 billion cubic meters. m the Main importer of blue fuel was Turkmenistan (27.7 billion cubic meters in 2015), followed by Australia (7.2 billion cubic meters), Qatar (6.5 billion cubic meters) and a number of other countries.
To stop there China is not going to. According to the plans for the XIII five year plan (2016-2020), gas consumption in the country should grow to 300 billion cu m In the middle of this year, the research Institute of the Chinese oil company CNPC announced the forecast that gas consumption in China by 2030, will increase to 510 billion cubic meters and by 2050 — to 710 billion cubic meters.
As for imports, according to the CNPC, is expected to increase by 2030 190-270 billion cubic meters with CNPC, “Gazprom” signed a contract on gas supply via the Eastern route — via the “Power of Siberia”. Now China imports 50-60 bn cu m. That is, the request to external suppliers will increase by at least 130 billion cubic meters.
Only in the last four years China has introduced seven LNG terminals, and the total capacity of China has exceeded 55 billion cubic meters last year were only half this amount, namely 27.6 billion cubic meters. let’s Not forget about the plans for the further expansion of these facilities.
This suggests that the country plans to buy more liquefied natural gas. There is a traditional Chinese suppliers (e.g. Australia) that are ready to expand the offer. Although this proposal is based on industries with a high cost, which at the current price of oil makes a significant portion of them unprofitable, for example, the Gorgon project. Central Asia is also ready until 2020 at least double the export of its gas to China. It is likely that the gas market of China with all its power will come out of Iran.
However, you need to understand that China’s plans depend on many factors, main of which — changes in the energy market, the development of environmental projects within the country and the military situation in the South China sea and the middle East.
A good example would be a short Saga with the production of shale gas in China.
In 2011, the U.S. Energy Information Administration conducted a review of the global resources of shale gas. China “discovered” technically recoverable reserves of shale gas in the amount of 36.1 trillion cubic meters. More than anyone in the world. China launched in this direction quite a flurry of activity. Initially it was predicted that by 2015, China will lead the extraction of “unconventional” gas to 50 billion cubic meters, and to 2020-mu — to 120 billion cubic meters a year. But for a number of reasons, in reality the total volume of shale gas in China by 2015 made up only 6 billion cubic meters. m. the Plans had to be revised up to 30 billion cubic meters by 2020.
The uncertain factor is the Middle East and Central Asia. There are optimistic estimates that by 2035, China will receive from Turkmenistan, Kazakhstan and Uzbekistan 110 billion cubic meters of gas against the current 30 bcm 80 bcm will be supplied by Turkmenistan. To understand the situation: now the country produces about 72 billion cubic meters and consumes 34 billion cubic meters. m however, she bears Napoleon’s plans for the construction of the TAPI pipeline to India, and to enter the European market. In short, Turkmenistan will have to try very hard to after 19 years to justify the hopes rested upon it.
The question is how will the events develop in the region. Now no one can predict how it will expand the zone of instability will not affect whether it is Iran and Turkmenistan. It is unlikely that China is ready to put on the Central Asian map its economic and political future.
The situation in the South China sea also puts pressure on Chinese plans to import LNG. In the region growing tensions. It is possible that at some point, one party may realize its advantages in the Navy in the Pacific, and physically not to let mechanology in China.
Confidence in the bright future of China’s gas enhances the coal. China now consumes a lot of coal, it consumes more coal than all other countries combined (50,2%). Coal has helped China become the biggest industrial power on the planet, but he’s now pollute the major cities and partly inhibits the development of the economy. It is starting to replace gas.
The current contractual obligations of “Gazprom” to China account for 38 billion cubic meters with the possibility of extension. Russian pipeline supplies will be impossible to cover even a hundred aircraft carriers, and in Eastern Siberia was too thinly populated to destabilize the situation due to the diffusion of terrorism and separatism from nearby countries, as it can be done in Central Asia.
It is possible that in coming years there may be events that will change not only the expansion plans of the gas market of China and the entire geopolitical landscape of the region. Our fascinating time carries a lot of unpleasant surprises. But, assuming the situation at the moment, Russian gas will be for China to guarantee stability of supply, which, moreover, in the shortest time possible will increase. In the peaceful development of the region, Russia is unlikely to become the dominant supplier in the gas market of China, but one of the leading positions is unique.
The author is Deputy Director General of the national energy Institute
The opinion of the author may not coincide with the position of the editorial Board