LNG

China has pledged to improve its use of cleaner fuel in the transportation sector where more LNG will be used for shipping, trucking and other industries, while domestic Emission Control Areas are being expanded in line with International Maritime Organization regulations and the natural gas pipeline grid will be improved.

The lengthy list of current and future plans has been published in main state-controlled media under the heading “Sustainable Development of Transport in China”.

The report noted that the Chinese directives are backed by the most recent 19th Communist Party of China National Congress with goals for realizing more modernization through to 2035.

“The Fifth Plenary Session of the 19th CPC Central Committee proposed that we should accelerate the effort to build China into a country with a strong transport system,” added the report.

China said it would be pursuing “green development” by promoting a cleaner and improved transport sector and would achieve real results in energy conservation and carbon reduction.

The report said there were now 400,000 buses and 430,000 trucks using new energy such as LNG, compressed natural gas and battery power and 180,000 natural gas and new fuel passenger vehicles such as hybrids. The country was planning to have more LNG-powered ships as part of its cleaner shipping policy.

China stated that it attached great importance to the prevention and control of transport pollution, and has issued a series of policy documents, including the “Implementation Plan on Domestic Emission Control Areas” in the waters of the Pearl River Delta, the Yangtze River Delta and Bohai Sea Rim (Beijing, Tianjin, Hebei).

It was also implementing the IMO’s “Global Marine Fuel Oil Sulfur Limits” brought in at the start of 2020.

“With its initial focus on the Pearl River Delta, the Yangtze River and the Bohai Sea, China has set the goal of controlling and reducing emissions of atmospheric pollutants including sulfur oxides (SOx), nitrogen oxides (NOx), particulate matters (PMs) and volatile organic compounds (VOCs) from vessels and improving the air quality of coastal areas and inland river port cities,” stated the report.

At present, China said its EMAs have been further expanded along the coastal areas and the main streams of the Yangtze and Xijiang rivers, and stricter control standards have been proposed for the waters in Hainan.

The main EMAs outside China are in Northwest Europe and North America and with others planned in the Mediterranean by the nations of Southern Europe where the broader use of LNG fuel for shipping is being promoted and bunkering availability is improving.

China, the world’s second-largest LNG importer, also stated that it was building out its natural gas pipeline grid.

“A trunk network of gas pipelines is improving with the capacity to transmit gas from West to East China, from Sichuan to East China and from Shaanxi to Beijing, and to bring gas from offshore,” said the report.

The report revealed other tranport statistics such China’s national railway electrification rate having reached 71.9 percent.

About 14 percent of airport vehicles and facilities are run on new energy sources, substitute facilities for aircraft auxiliary power units (APUs) are in full use, and the numbers of postal vehicles run on new and clean energy such as electricity and gas are steadily increasing in key regions.

“More than 7,400 charging piles have been built and operated in 942 expressway service areas across the country, more than 5,800 sets of shore power facilities have been built at ports, covering over 7,200 berths, and container terminals at major ports along the Yangtze and coastlines have switched from oil to electricity for power,” it explained.

“The annual energy saved by green transport provinces and cities, green highways, green ports and other demonstration projects has exceeded 630,000 tonnes of coal equivalent,” added the report.

It added that coal logistics corridors are better configured and a railway corridor for energy and commodities transport running across the country has taken shape.

“China is engaged in an all-out effort to build a great modern socialist country. Transport will play a stronger part in leading economic and social development. China will implement the new development strategy and develop safe, convenient, efficient, green and economical transport to lay a solid foundation for modernization by 2035,” concluded the report.

The Chinese government said the nation had taken formally brought the pipeline and storage assets of the largest energy majors under the newly formed China Oil & Gas Pipeline Network Corp. while paying for the assets and giving the majors stakes in the company.

China National Petroleum Corp. (CNPC), the largest of the majors, said it would sell most of its oil and gas pipelines and storage facilities to China Oil and Gas Pipeline for 268.7 billion yuan ($38.30 billion) and hold a 29.9 percent stake in the new national pipeline and storage company.

CNPC will be the largest shareholder of the Chinese majors in China Oil & Gas Pipeline.

“By interconnecting the country's oil and gas pipelines, the new company will help raise the allocation efficiency of oil and gas resources and ensure safe and stable energy supply,” said a government statement.

The new centrally administered China Oil & Gas Pipeline, also known as PipeChina, was established in December 2019 to be responsible for the investment, construction and interconnection of oil and natural gas pipelines, as well as third-party access to LNG terminals and storage facilities.

China has around 64,000 kilometres (about 40,000 miles) of pipelines carrying natural gas, 27,000km carrying oil and 21,000km carrying petroleum products such as gasoline and jet fuel, according to the most recent figures from China’s main economic planning agency.

Most of the pipelines were owned under the name of CNPC’s Hong Kong-listed affiliate PetroChina.

PetroChina’s dominance of the oil and gas distribution network was seen as having a negative impact on domestic exploration and production as other companies could be blocked or have to pay expensive fees to get their oil and gas to market.

Under its statutes, China Oil and Gas Pipeline is set to offer open access to pipeline networks to approved companies.

Another stake in China Oil & Gas Pipeline will be held by the country's largest oil refiner, China Petroleum and Chemical Corp. (Sinopec) in return for the sale of some of its oil and gas pipeline assets

Sinopec’s transferred pipeline assets are valued at 122.7Bln yuan ($17.48Bln). It will receive a 14 percent stake in China Oil & Gas Pipeline and 52.7Bln yuan ($7.51Bln) in cash.

“Sinopec Natural Gas entered into the agreement on additional issuance of equity and cash payments to purchase assets with PipeChina, pursuant to which Sinopec Natural Gas proposed to transfer equity interests in the relevant oil and gas pipeline companies to PipeChina,” explained Sinopec.

The government statement made no mention of asset transfers from China National Offshore Oil Corp., the nation’s biggest LNG importer, but whose pipeline network delivery assets are much less than those of CNPC and Sinopec.

Analysts said the start of operations by China Oil & Gas Pipeline will have an impact over time on the access of LNG imports to the domestic natural gas network and market, which is still separated into North and South because of still inadequate infrastructure between provinces.

One of its tasks in addition to enabling third-party access to LNG terminals is to improve pipeline flows nationwide and to be an investment vehicle for more natural gas and storage facilities.

That’s as Chinese LNG imports in June jumped 27.8 percent to 5.79 million tonnes, or around 84 cargoes, compared with 4.53MT in June 2019, according to data from the General Administration of Customs.

In the January-June period, the LNG shipments to China increased by 9.9 percent percent to 31.18MT versus 28.37MT in the first half of 2019.

The data also showed that China’s pipeline natural gas imports dropped 15 percent to 2.54MT and fell in the first half by 7.4 percent to 17.18MT.
China imports its pipeline gas from Myanmar, Turkmenistan, Kazakhstan, Uzbekistan and Russia.
China’s main LNG suppliers are Australia, Qatar, Malaysia and Indonesia, while the US has just resumed LNG shipments.