LNG

Moody’s Investors Service, the US ratings agency, said in a report into liquefied natural gas that Chinese demand in 2024 will be similar to last year and while European gas markets remained resilient the region’s reliance on LNG could increase price volatility.

Elixir Energy Ltd, the Australian-listed exploration and production company, said it aimed to demonstrate early in the New Year a commercial flow-rate from its pilot Nomgon coalbed methane (CBM) project located in the south of Mongolia near the Chinese border.

The past 12 months have been the most turbulent and testing year ever for the energy industry, in particular the natural gas sector and the markets, according to the International Gas Union President Li Yalan.

The IGU President also noted in the December issue of the IGU’s monthly publication that there had also been hard times in many other sectors of the economy and for populations in general.

“The global energy crisis continues and energy markets are rocked by conflict, high and volatile prices, low supply and demand destruction,” stated Li, who was nominated as head of the IGU from the Beijing Gas Group.

“Energy consumers are directly exposed to the energy crisis, with people struggling to pay their bills due to high energy cost,” she said.

“Many had to turn down their heat this winter, several regions have had to endure power shortages and others are walking through darker streets or working remotely to conserve energy,” she added.

Coal use

“Many factories were forced to stop producing, or close down faced with unaffordable energy and deficiency in raw materials. To navigate through the crisis, many countries had to prioritize energy security over energy transition as a result we see a growing number of countries adding coal-power capacity, and increased use of coal - the
most emitting fossil fuel - all across the world, rich and developing alike,” she explained.

The IGU President emphasized that there was an upside as there were positive signals that investments were increasing for natural gas projects and for renewables and that these trends needed to continue for the global energy balance to be restored.

“As we wrap up this year and reflect on its many stresses, I hope that a key lesson that can be learned from it is that energy systems cannot be changed overnight,” noted Li.

“In the recent years leading up to this crisis, energy security became forgotten and long-term planning for secure and reliable supply was seemingly forgotten with it,” she explained.

“This crisis reminds us that energy security should be brought back in balance with economic and environmental policy considerations,” Li declared.

LI added that it was imperative that the world arrives at a “real plan” for an achievable transition toward a clean, secure and affordable energy system.

“Most importantly, it will require an honest dialogue between all key players, including the gas industry,” she said.

Chinese liquefied natural gas imports in July 2022 to its network of 22 regasification terminals declined significantly on a year-on-year basis amid an economic slowdown while shipments from Russia have edged higher since the Ukraine invasion.

China’s National Development and Reform Commission (NDRC), the nation’s economic planning body, has urged energy companies to increase imports of liquefied natural gas and thermal coal for power generation as colder weather hits northern China around the capital Beijing and is forecast to last for weeks.

China Petroleum and Chemical Corp. (Sinopec), one of the largest LNG importers, said it would seek more volumes on the spot market.

Sinopec and PetroChina, the Hong Kong-listed affiliate of China National Petroleum Corp. and another LNG importer, have also said they would be increasing shale-gas production under five-year plans.

Sinopec, a shareholder in the Australia-Pacific LNG plant in Queensland operated by ConocoPhillips, said its regasification terminals at Tianjin Port in the north and the east China Qingdao facility would both handle record volumes in January.

The company said it would also increase domestic natural gas production by another one million cubic metres per day by the end of January by accelerating the drilling of new development wells.

Sinopec said it was additionally extracting gas from its underground storage in central and east China, while maintaining high inventories at LNG storage tanks.

Chinese LNG imports soared to a record in November and surpassed the monthly total of shipments received by Japan, the world’s largest LNG importer.

Another record of LNG volumes is forecast to be announced for December. China’s November imports amounted to 6.61 million tonnes, 2.4 percent from a year earlier, while Japan’s November shipments came to 6.02MT.

For the first 11 months of the year, China received shipments totalling 59.54MT, an increase of 10.7 percent compared with the same period of 2019.

November 2020 is the fifth time that China had taken the position of the largest LNG importing country on a monthly basis, following November 2019 and May, June and August 2020.

China’s main LNG suppliers are Australia, Qatar, Malaysia, Indonesia, Russia and the US.

At the same time, PetroChina and Sinopec are planning to increase their shale-gas output over the next several years from the Sichuan shale basin in central China.

PetroChina aims to more than double shale gas production in Sichuan to more than 22 billion cubic metres by 2025.

That will surpass a target set by Sinopec, which led China’s shale gas development with the first commercial discovery at Fuling in Sichuan, from the current 7.5 Bcm of output to 13 Bcm by 2025.

Sinopec has added 83 Bcm of newly proven reserves that have yet to enter production at the Chuanxi field in Sichuan.

The reserves, certified by the Chinese Ministry of Natural Resources, raise the field’s total proven resources to 114 Bcm.

The reservoir is spread over 138 square kilometres in the western part of the basin at depths of 6,000 metres.

However, shale gas output is limited in China in that by 2025 the total annual production by Sinopec and PetroChina combined would only amount to the LNG shipments from one large US Gulf Coast LNG export plant.

PetroChina’s shale operations are centred in the Yibin, Zigong, Neijiang, Luzhou and Yongchuan regions of the Sichuan Basin.

The company started appraising shale gas blocks in the Sichuan basin in 2006 and made its first major discovery with the Wei-201 well in 2010.