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What projects will have a pivotal role to ensure China’s energy security?


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Interview with Shan Weiguo, Head of Gas Market Research at CNPC. This is the second part of a two-part interview. Read the first part here.

Gastech News: What projects will have a pivotal role to ensure China’s energy security?

Shan Weiguo: There are many projects. The most important one is dealing with the infrastructure, especially the import facilities: the pipelines and LNG terminals. China started to import natural gas since 2006, first through LNG and later by pipeline gas. Now, we have 11 LNG importing terminals, with an importing capacity of over 40 million tons. There are many pipelines from Turkmenistan, Kazakhstan in central Asia; Myanmar in the South West and a to- be-newly- constructed Russian Far East gas pipeline to the North Eastern part of China. The second part of the infrastructure issue is dealing with gas storage capacity. There are seasonal changes for gas utilization: in China, nationwide, if there is one meter in summer there will be two meters in winter. But for Northern cities like Beijing, if there is one meter in the summer, there will be 16 cubic meters in the winter. Thus, gas storage is very important for stable utilization and supply security in big cities for residential living. At this time in China, we have 9 such storage facilities with a working capacity of 4 bcm, but the total design capacity shall be 15-20 bcm. Its share in total gas consumption is still small: maybe 2 percent by now. It’s much smaller than the 15% to 20% in the U.S. or European countries and especially Northern parts of the world. We need more gas storage capacity and relevant promotion policies from the government like peak-shaving gas prices.

Those are just two categories of projects that can guarantee supply security in China.

Gastech News: In terms of technology, what should we expect in China?

Shan Weiguo: There are two categories here. The first is that gas turbine technology is most important in China. For the gas fired power plants, all the key technologies are provided by foreign companies like GE, Siemens and Mitsubishi. Some Chinese companies can provide complementary technologies, but the key technologies are in the hands of the foreign companies. Chinese power plants have to pay high premiums for maintenance, thus there are great costs for the gas-fired power generation sector in China. If there is a technology breakthrough in this sector, it can contribute a lot to the Chinese gas industry and the gas demand boom in the future. The second category of industry deals with upstream exploration production and dealing with unconventional gas exploration, like shale gas and CBM development technology. For shale gas, there are two major technologies: one is fracking, and the other is horizontal well drilling. Some of the technology can be sold to China, but it might not be able to be properly applied to Chinese territory in terms of ground conditions. If such technologies can be used or developed properly according to Chinese geological conditions, we can have more gas production.

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