Policy makers in Beijing seek to boost domestic production of gas, but the country also needs more LNG and piped gas imports. Gas currently accounts for less than 8 percent of China’s energy mix, compared to a global average of 22 percent.
Forecasts as to how China will cover its rising gas needs vary widely, though most analysts expect China’s import dependency will grow significantly. DNV GL’s Industry Outlook 2019 research showed almost two thirds (61 percent) of senior industry professionals in China say more investment is needed in LNG and pipeline infrastructure.
Striving to secure supplies, without disregarding safety
As Chinese gas demand spirals, the pressure on securing supply is high, while the requirements on the reliability of facilities and equipment are even higher. ”As China is enhancing pipeline interconnections, we need to pay high attention to safety management with zero tolerance for major incidents,” said Mr. Zhou, a manager from a major Chinese pipeline operator.
”There are still have challenges in intrinsic safety management, and integrity management of facilities and equipment,” said Arthur Stoddart, regional manager, China, South Korea and Japan, DNV GL – Oil & Gas.”Gaps need to be closed in the establishment and implementation of our management system, and strong execution and sufficient tools need to be in place to facilitate the implementation, and then manage and maintain the improved infrastructure.”
Fast-tracking LNG regas and pipeline expansions
Some 18 LNG import terminals have been in operation in China over the past year, with a total installed domestic capacity of nearly 60 million tonnes per annum (mtpa). Seven were being expanded and another seven new-build terminals are on the drawing board. The projects could add nearly 19 mtpa capacity by the early-2020s, with more expected by mid-decade.
BP’s latest Energy Outlook anticipates that around half of China’s additional gas needs will be met by new pipeline capacity from Russia and other CIS countries, and the rest from LNG. Over the coming twelve months, the government in Beijing wants to create a state-owned national pipeline company to operate all oil and gas pipeline networks to extend its reach and reliability.
To enhance supply security, China is expanding its strategic gas storage and is building up a fleet of LNG carriers to become less exposed to seasonal price shifts.
