Russian gas exports will spark ‘explosive’ growth in China´s underserved northeast

Beijing, May 27 - Neftegaz.RU. China’s underserved northeast will record “explosive” growth in consumption when Russian gas finally arrives next year in the region, the country’s only area not serviced by a natural gas trunk pipeline, Stock Visionary reported.

“In the next decade, the northeast will see explosive growth because, currently, only limited gas is imported from Qatar via a terminal in China’s northeastern Liaoning province. And supply from small gas fields in [China’s northeastern] Heilongjiang province are far from enough to meet demand,” said Frank Li Yuntao, Gen.manager of investor relations at Hong Kong-listed China Gas Holdings.

The company,China’s largest gas distributor with 508 projects, commands just over 70 % of the market in Liaoning and Heilongjiang. The nearby Jilin province is served mostly by small local state-owned franchises.

China Gas invested in a gas distribution concession in Heilongjiang’s capital city Harbin as far back as a decade ago, but it has been waiting for gas supply to make it viable.

And it could take years before the 3,968 km “Power of Siberia” has a major impact, as it will only reach full capacity in 3 to 5 years, said Li. He said initial supply from Power of Siberia is expected at 5-8 billion cu m (bcm), while its total capacity stands at 38 bcm.

An insufficient gas supply means the northeast region relies on highly polluting coal-fired boilers for winter heating in households and commercial buildings, as well as for industrial applications.

Beijing has made huge strides in pollution control in recent years, by aggressively pushing coal boiler replacement programmes in northern cities in favour of gas-fired ones, but China’s average emission levels remain much higher than World Health Organisation-recommended limits.

China Gas is targeting an average of 25 % growth in gas sales over the next 3 years, before accounting for potential sales of Russian gas in the northeast.

Swiss bank Credit Suisse has forecast that China’s average gas demand growth will be 10 % in the 9 years to 2026. Last year’ gas consumption grew by 17 %, up from 15.3 % in 2017 and 6.6 % in 2016.

Author: Jim Carter