China intends to rebuild the gas machine by relinquishing US trade imports

While China imposed tariffs on liquefied natural gas (LNG) imports from the United States starting last year, it remains the world’s second-largest buyer of super-cold fuel.

China aims to reduce its growing dependence on gas imports by promoting domestic projects such as clay fields as security of its energy supply comes under the spotlight amid a fierce trade war with the United States.

According to the report, gas consumption in China will increase by about 10% this year to 310 billion cubic meters (bcm), and continue to rise until 2050. Although slowing from 17.5% last year, 2019 still represents an annual increase of 28 bcm, faster than the average annual growth of 19 bcm during 2007-2018, the report said.

“Reliance oil and gas imports to China are growing very fast, with oil accounting for 70% and gas reaching 50%,” said Lin Boqiang, Director of the Institute of Energy Economics at Xiamen University.

The NEA report calls for the construction of the Sichuan basin at the highest gas center in the country because of its rich resource base in both conventional gas fields and unconventional sources, such as clay gas and ‘i gas. narrow ‘, a low permeability gas derived from reservoir rocks and costly to develop.

“By expanding the development of deep reservoir gas, narrow gas and clay gas, Sichuan is likely to account for about one-third of the country’s total natural gas production,” the report said, of 20% currently.

Sichuan clay gas, the main region for the development of China’s still clay gas, could surpass conventional gas production, the report added.

CLAY GAS

Dominant oil and gas firms have already increased drilling activities at nearly record prices, in response to a call by President Xi Jinping in August last year to boost domestic energy security.

To accelerate growth, Beijing should consider offering tax sweeteners such as reluctance to tax resources on clay gas, Zhao said.

China also recently announced a policy to extend subsidies for another three years for nonconventional domestic gas production, including for the first time gas.

In a research note last week, Wang Xueke, a consultant at Wood Mackenzie, raised China’s narrow view of gas to 85 bcm by 2040, from an early forecast to 68 bcm.

Despite high forecast and state subsidies, China faces complex geology and lack of technological advances to make clay gas a lucrative business to lure in private money.

“The investment is still very small as only a small state-run company is exploring it … Technology progress is not fast enough,” said Xiamen University’s Lin./Investing.com

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