DAILY | HONG KONG EDITION Wednesday, March 24, 2021 | 15 BUSINESSFOCUS Clean fuel drive to continue LNG’s stellar run Market should keep outperforming as nation pledges solid efforts to peak CO2 emissions, achieve carbon neutrality

By ZHENG XIN [email protected]

China has led the recovery in liq­ Demand for LNG used uefied demand follow­ in heating and power ing the outbreak of the COVID­19 pandemic, and is expected to fur­ generation is growing ther boost LNG demand, as the notably faster than country pledges solid efforts to peak carbon emissions and achieve car­ that for any other bon neutrality. fossil fuel, as the The country, on course to become the world’s biggest importer of LNG, nation looks for a increased imports by 7 million met­ cheap, reliable and ric tons to 67 million tons last year, up 11 percent year­on­year, accord­ cleaner alternative to ing to the recently released annual .” LNG Outlook by . China’s announcement that it Cao Lujia, an analyst at BloombergNEF aims to become carbon neutral by 2060 is also expected to continue driving its LNG demand given the Liu Ping with CNOOC (Hainan) key role gas can play in decarboniz­ Fudao Chemical Ltd, who is also a ing hard­to­abate sectors, including deputy to the 13th National People’s buildings, heavy industry, shipping Congress, said it was necessary for and heavy­duty road transport, said the country to step up infrastruc­ the report. ture facility construction to ensure This is against the backdrop that sufficient energy supply. global LNG trade increased to 360 Compared with other energy stor­ million tons in 2020 despite the age facilities, the LNG terminals unprecedented volatility caused by enjoy rapid construction speed and the COVID­19 pandemic that result­ flexible and convenient storage. ed in lockdowns around the world. While the country is already rapidly The trend is only expected to con­ building up its LNG terminal con­ tinue. According to a forecast by struction, it still lags far behind the energy consultancy ICIS, China is global average, he said. expected to import between 4.7 mil­ After the Dapeng LNG terminal lion tons and 5.3 million tons of was constructed in 2006 by CNOOC, LNG per month between February the country had 22 LNG terminals and April, on average a 12 percent A tanker from Qatar docks at a Group port in Tianjin in November. As a major strategic partner in the energy nationwide by the end of 2020, increase compared to the corre­ sector, Qatar has supplied millions of tons of LNG to China since 2009. HU QINGMING / FOR CHINA DAILY including six operated by PipeChi­ sponding months last year. na, five by CNOOC, five operated by On an annual basis, the consult­ nonnational oil companies includ­ ancy forecast that China will import ing local SOEs and private compa­ 76 million tons this year, an 13 per­ nies, four operated by China cent year­on­year increase. National Corp and two Analysts believe China’s gas by China Petroleum & Chemical demand has recovered faster than Corp. Total capacity reached 86 mil­ expected after the pandemic, driven lion tons per year, according to mostly by the industrial sector. The BloombergNEF. deal­making environment for LNG However, compared with coun­ is also quite bright this year with tries including Japan and South the domestic economy roaring back Korea, China has a long way to go in to life. stepping up the utilization rate of Cao Lujia, an analyst at Bloom­ coastal land resources and opera­ bergNEF, said: “Demand for LNG tional costs, and the government used in heating and power genera­ should prioritize extending the tion is growing notably faster than capacity of existing LNG terminals to that for any other fossil fuel as the further raise the gas storage facilities’ nation looks for a cheap, reliable utilization rate, Liu said. and cleaner alternative to coal. CNOOC, as a pioneer of China’s “The role of ’s LNG sector that built the nation’s road to carbon neutrality in 2060 is first LNG terminal in 2006, vowed critical, and increasing the share of to further diversify its overseas LNG natural gas in the primary energy sources to further ensure supplies. mix is expected to lead to China’s It signed a memorandum of natural gas consumption increasing Sinopec employees conduct safety checks on LNG transport equip­ China National Petroleum Corp technicians monitor an LNG storage understanding with Malaysia’s state 58 percent by 2030 compared with ment in Tianjin in November. HU QINGMING / FOR CHINA DAILY operation site in Chongqing on March 14. HUANG WEI / XINHUA oil firm Petronas on March 15 for 2020. further collaboration across the “China topped the major markets supply chain, including refining, oil­ in terms of demand growth last year, last year, 35.13 million tons worth China’s opening­up of LNG termi­ Offshore Oil Corp — to be able to use ities entered the market last year, field and engineering services, spe­ despite the pandemic, and the $12.5 billion, followed by Jiangsu nals to third parties will also encour­ its terminal slot and import LNG starting with spot LNG cargo pur­ cialty chemicals, lubricants and northern parts of China made up 39 province’s 8.13 million tons at $3.1 age more participants to get without having to build their own chases, signing term contracts to renewable energy, based on their percent of total gas demand in billion and Guangdong province’s involved in the LNG import sector. terminals, which in turn lowers bar­ secure long­term supplies. current relationship in LNG and 2020.” 4.2 million tons at $1.2 billion. China Oil & Gas Piping Network riers to entry in the Chinese gas Guangdong Energy signed a five­ upstream projects. Aiming to increase the share of Cao said that while increased nat­ Corp (PipeChina), China’s largest market. year deal with Mitsubishi’s Dia­ Being the country’s largest off­ natural gas in the primary energy ural gas usage at the expense of coal energy infrastructure company — PipeChina last year began its role mond Gas for four cargoes of gas a shore oil and gas producer, CNOOC mix to 15 percent by 2030 from and oil will help reduce China’s car­ created in 2020 amid the country’s as the operator of six existing LNG year, with to will also intensify collaboration around 8 percent in 2019, China has bon emissions, the Chinese govern­ largest gas market reform in dec­ terminals that were transferred receive a third of the gas. As a result, with Petronas, the world’s fourth­ already been reducing carbon emis­ ment is unlikely to rely on imported ades — launched a website plat­ from China National Offshore Oil Dapeng LNG terminal registered a biggest LNG exporter, in the estab­ sions by replacing coal and oil with gas to achieve meaningful decar­ form in late October that allows all Corp and China Petroleum & Chem­ 17 percent year­on­year growth in lishment of a global bunkering natural gas in certain areas includ­ bonization or carbon neutrality, third parties to register as certified ical Corp. imports, thanks to third­party supply network and expansion of ing residential heating and heavy­ unlike the United States, which has shippers and apply for pipeline In the last quarter of 2020, the access utilization for stakeholders the use of natural gas as a cleaner duty commercial vehicles. This is abundant domestic gas supplies transmission and LNG import number of new entities accessing such as Guangdong Energy and marine fuel through LNG bunker­ also in accordance with the govern­ that have helped lower its emissions. capacity. Some 1,000 shippers had the terminals as part of the third­ Guangzhou Gas. ing solutions. ment’s priority of improving air “Experience from European applied for certification on the party access initiative had led to “This year, PipeChina will further With an annual receiving capacity quality. countries shows that biomethane platform by the Oct 20 deadline, it increasing terminal imports at consolidate midstream gas assets of 29.6 million tons at its China mainly imported LNG from and are a crucial next­step said. Diefu and Yuedong terminals in and provide third­party access and LNG terminal, Zhuhai LNG termi­ countries including Australia, Qatar to enable long­term climate goals to With original intent to liberalize Guangdong province, said Bloom­ more new players are expected to nal, Dapeng LNG terminal, Fujian and Malaysia, which sold 29 million be reached. The emissions intensity China’s natural gas market and bergNEF. enter the market. This could further LNG terminal as well as Zhejiang tons, 8 million tons and 6 million of natural gas can also be lowered allow more market participants to Six new users at Diefu terminal, boost LNG demand,” Cao said. LNG terminal, the company is cur­ tons of LNG to China last year, substantially with carbon capture access LNG infrastructure facilities, which included power and gas utili­ Some new contracts signed by non­ rently the country’s biggest LNG respectively, with sales value reach­ use and storage technologies, or PipeChina allows other companies ties and local gas trading compa­ national oil companies also began importer and the world’s third larg­ ing $10.3 billion, $3.4 billion and CCUS. A combination of these three in addition to the countries’ top nies, contributed to 36 percent of this year, including Foran Energy and est. It aims to set up more LNG ter­ $1.8 billion, data from the General approaches will help the natural gas three oil majors — China National total terminal imports in the fourth ENN’s deal with BP for 600,000 mil­ minals in Fujian and Zhejiang Administration of Customs showed. industry evolve and deliver low­car­ Petroleum Corp, China Petroleum & quarter of last year, it said. lion tons of LNG supply each, with provinces to increase its receiving Beijing imported the most LNG bon growth,” she added. Chemical Corp and China National Many Chinese power and gas util­ deliveries starting this year. capacity.

ered faster than expected after the 4.8 tons in 2020, according to Novatek increases sales to meet China’s energy needs pandemic, driven mostly by the BloombergNEF. It exported 1.1 mil­ industrial sector, which has recov­ lion tons of LNG to China in 2018, ered to 2019 levels in May. The trend followed by 2.8 million tons in 2019. By ZHENG XIN Petronas’ Shanghai LNG turf, add­ pal government, Shenergy was the increase its supplies of LNG to this is expected to continue as the Chi­ The country is also the fifth larg­ ing to a growing trend of Shanghai first State­run company in addition country. nese economy roars back to life and est LNG supplier to China in 2020, recently signed a diversifying its LNG supply mix, to China’s dominant State energy “Our LNG commercial strategy is offices reopen. followed Australia, Malaysia, Qatar sales and purchase agreement with where currently about 80 percent giants to own and run a receiving to diversify our client base and tar­ The Economics & Technology and Indonesia. Russia’s second­largest gas produc­ comes from Petroliam Nasional Ber­ LNG terminal. get end consumers in the fast­grow­ Research Institute, a think tank Russia started launching gas er Novatek to receive more than 3 had (Petronas)’s Malaysia complex,” Cao said Shenergy is also actively ing Asia­Pacific region and the LNG under China National Petroleum deliveries to China via the Power of million metric tons of liquefied nat­ said Cao Lujia, an analyst at Bloom­ diversifying its LNG sources. Centri­ volumes produced from our Arctic Corp, expects the country’s average Siberia pipeline in 2019 — one of the ural gas over a 15­year period. bergNEF. ca Plc will deliver 500,000 million LNG 2 project are core to our long­ annual increase in natural gas most anticipated energy projects in The LNG will be sourced from Petronas has a long­standing rela­ tons a year, starting in 2024, poten­ term objective of delivering afforda­ demand will exceed 20 billion cubic Asia. It is expected to gradually Arctic LNG 2, a new project in Rus­ tionship with Shenergy and delivers tially sourced from the United ble, secure and sustainable natural meters in the 14th Five­Year Plan ramp up supplies to 15 billion cubic sia, and will come online around 3 million tons of LNG a year to Yang­ States and Qatar. Total SE and Shen­ gas for many decades,” Mikhelson period (2021­25) and reach 430 bcm meters in 2022 and 38 billion cubic mid­2023 at the earliest. shan, Shanghai. The two companies ergy established a joint venture in said. in 2025. meters in 2025. Analysts said this will help the also signed a deal last year to send 1.5 2019 to expand LNG sales in the Partners in the LNG project are Li Ziyue, an analyst at Bloomberg­ By 2023, as much as 40 percent of Shanghai­based company to ensure million tons of LNG a year to Wuhao­ Yangtze River Delta, she added. Novatek with 60 percent of interests NEF, said that demand for natural Chinese gas demand growth will be its energy needs. It is also in accord­ gou terminal starting in 2022. Novatek Chairman Leonid and Total, China National Petroleum gas had been suppressed in 2020, met through Russian gas from Pow­ ance with a growing trend for Yangshan and Wuhaogou termi­ Mikhelson said the Chinese mar­ Corp, China National Offshore Oil which will lead to robust growth er of Siberia, which will make Russia Shanghai to diversify its LNG supply nals supply over 50 percent of the ket is one of the key regions in the Corp and Japan Arctic LNG, each this year. one of the major natural gas suppli­ mix. total gas consumed in Shanghai. company’s LNG marketing strate­ with 10 percent stakes. Russia has increased LNG supply ers to China in the future, in addition “Russia’s Novatek has entered Backed by the Shanghai munici­ gy and Novatek plans to further China’s gas demand has recov­ to China in recent years, reaching to Australia and Turkmenistan.