Experts expect fierce competition for gas exporters in China
The cherished dream of gas exporters is to enter one of the most promising gas markets in the world: Chinese. According to the EADaily website, in 2018, China began to actively switch from coal to gas, and gas consumption in the country grew by 19% to 280 billion cubic meters. Of these, 124 billion were imports. It took off by 30 billion cubic meters and mainly due to LNG. Deliveries of liquefied gas increased by 42% – up to 74 billion cubic meters.
The largest supplier was Australia. It provided 42% of LNG for China. However, experts believe that such growth will not last long. According to gas market analysts cited by EADaily, Russian pipeline gas will stop LNG expansion into the Chinese market.
Jin Lei, a professor at China University of Petroleum, told the Global Times that Australia will face serious difficulties when the Russian Power of Siberia gas pipeline starts operating, as the advantage of pipeline gas in price will be squeezed by the LNG market. In his opinion, after the commissioning of the third gas pipeline to China from Russia, LNG needs will become limited, and gas pipelines will be able to cover all the growing needs.
Not so categorical is the International Energy Agency (IEA). Jean-Baptist Dubreul, a gas analyst with the agency, believes that LNG imports to China will total 109 billion cubic meters by 2024. The growth over five years will be more than 38% despite the fact that last year it increased by 42%. That is, bringing Russian pipeline gas to Central Asia will only slow down the growth of LNG supplies to the Chinese market. Not more.
By 2020, Australia plans to increase LNG exports to 121 billion cubic meters (88 million tons). At the same time, according to the consulting agency Timera Energy, its price will play against Australian LNG, one of the highest. Despite the fact that gas prices in the region continue to break records and are now below $ 180 per thousand cubic meters. But for now.
Last year, China received through the pipeline from Turkmenistan, Uzbekistan and Kazakhstan 47 billion cubic meters. Still small volumes came along the highway from Myanmar. Russian supplies will almost double pipeline import – by 38 billion cubic meters. But this volume is expected only by 2025, when, according to calculations, the Power of Siberia gas pipeline will reach its design capacity.
According to Alexey Grivach, deputy director of the National Energy Security Fund, another threat to LNG is the construction of the fourth string of a gas pipeline from Turkmenistan, through which China will be able to receive another 25-30 billion cubic meters.
The analysis of expert opinions regarding the situation in the Chinese gas market shows that the most realistic assessment of the situation is by the expert of FINAM JSC Alexey Kalachev, who notes that the growth in consumption in China will be noticeable in any case, and that there will be enough room for all exporters in the gas market if they offer a competitive price.
“A more serious threat to gas exporters is China’s plans to increase domestic production. Last year, China’s own gas production has already grown to 161 billion cubic meters, and by the end of 2020 the goal is to reach the level of 360 billion cubic meters,” concluded Alexey Kalachev.