According to the Chinese zodiac, 2016 is the Year of the Monkey. In China, the monkey is associated with ambition, activity, intelligence and adventure, which could be taken as an encouraging sign for the country’s downstream industry. After all, there are some very interesting developments in store for 2016 and beyond, which, with any luck, will provide a confidence boost to workers, operators and management alike.
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Once a simple, provincial country, which largely kept itself to itself, China is now the world's most populous region, with a powerhouse economy that has experienced extraordinary expansion over the last few decades (the total population in China was last estimated at approximately 1.367 billion in July 2015). Naturally, this has resulted in a rapid rise in energy demand and increased government focus on securing energy resources.
Today, China is both the largest energy consumer and producer on the planet, and home to some exciting downstream ventures, particularly within the natural gas sector. The government is currently pushing to expand natural gas usage, as a substitute for both coal and oil, as part of the Chinese State Council’s Energy Development Strategy Action Plan (2014 - 2020). The plan sets out a number of measures and mandatory targets to promote greater efficiency, cleaner fuels and increased domestic energy production, aiming to have natural gas supply 10% of China’s primary energy needs by the year 2020.
Although there is, admittedly, a long way to go – natural gas comprised only 5% of the country's total primary energy consumption in 2012 – the fuel’s production and use is swiftly increasing throughout China, which has resulted in the rapid development of pipeline and natural gas processing infrastructure, led by the three major state-owned oil and gas companies: China National Petroleum Corporation (CNPC), Sinopec, and China National Offshore Oil Corporation (CNOOC).
Growth in natural gas demand has also led China to become a major player in the LNG market – in 2014, the country imported 957 billion ft3 of LNG, a 7% increase from 895 billion ft3 in 2013, and consumed about 8% of the global LNG trade – and imports are expected to increase as more terminal capacity comes online.
According to EIA data, China was home to 12 major LNG terminals and a small peaking facility at the beginning of 2015, with several others under construction and/or in various stages of planning. The large, national companies own majority stakes in most of the existing and proposed terminals; however, the changing LNG landscape is providing opportunities for smaller local and private firms. A number of facilities, which are currently in the construction stage, are due to come online in 2016 - 2017, including ventures from Sinopec, CNOOC, Shenzen Gas, Fujian Investment Development, ENN Group, Guanghui Energy and Shell, with capacities ranging from approximately 80 - 395 million ft3/d. Furthermore, several LNG terminal capacity expansions have been proposed, or are underway, which are due for completion within the next two to three years.
2016 will undoubtedly bring a host of new developments for the gas industry, both in China and throughout the world. We’ll keep you updated with all the latest industry activity at www.energyglobal.com.