PetroChina to build more gas import terminals as Beijing aims to trim trade surplus with US
State-backed energy giant PetroChina plans to build more terminals to receive imported natural gas, including from the US, in a move which would help relieve Sino-US trade tension.
The plan to build facilities to process chilled and liquefied gas arriving by ship in Shandong, Liaoning, Guangdong and Fujian provinces was announced by officials at gas-distribution subsidiary Kunlun Energy, which has been tasked with testing their feasibility.
“Kunlun has import terminals in Jiangsu, Tangshan, Dalian, and PetroChina is building one in Shenzhen,” Kunlun chief executive Zhao Yongqi told reporters after the firm’s annual general shareholders’ meeting on Thursday.
“To ensure supply, Kunlun is conducting feasibility studies to build more terminals in Shandong, Liaoning, Guangdong and Fujian provinces.
“Efforts to expand gas imports from the US will present opportunities for Kunlun to source gas for these projects.”
The new terminals would have facilities to “re-gasify” the imported fuel – a process by which gas that had previously been turned into liquid form by cooling it to extremely low temperature back is returned to its original state.
Zhao said the National Development and Reform Commission has been holding meetings “almost every week” to coordinate efforts to speed up progress of the proposed terminals, whose construction could start as early as next year and will take three years.
“We are communicating with local governments on siting the projects, and [assessing] the marine traffic implications,” he said.
Washington has demanded China reduce its trade surplus with the US by at least US$200 billion by the end of 2020.
Although the demand is considered by analysts a tall order, Beijing and Washington averted an imminent tariff war last weekend by agreeing on “meaningful increases” in Chinese energy and agriculture imports from the US, with details to be worked out later.
More than two dozen plants have been proposed in the US – the world’s top gas producer since 2009 – to turn natural gas into liquid form for exports, but their construction is pending long-term gas purchase agreements with customers. Many are vying to sell to China.
Mainland China last year surpassed South Korea to become the world’s second-largest liquefied natural gas importer, shipping in 37.9 million tonnes compared with Korea's 36.5 million tonnes. That is still roughly half of Japan's 81.6 million tonnes.
Imports accounted for 39 per cent of the mainland’s gas consumption last year. Liquefied gas took up just over half the volume, with the rest from piped gas.
Raising gas imports from the US is also in the interests of China, which has struggled to meet demand in major urban centres where coal boilers are increasingly being replaced by cleaner-burning gas units.
With domestic production falling a long way behind demand – output growth is at 4.2 per cent while growth in demand stands at 17.4 per cent – China’s gas imports jumped 37.3 per cent in the first quarter from the same period last year.
Imports of liquefied natural gas surged 59 per cent and that of piped gas surged 13.8 per cent.
But importing more only solves part of the problem, since a huge difference between winter and summer demand means there is unmet demand for gas storage facilities.
Beijing has stipulated that gas distributors must have storage capacity amounting to at least 10 per cent of their annual sales by 2020.
PetroChina, which supplies more than 60 per cent of the nation’s gas, has the greatest need to build storage facilities, which include storage tanks at import terminals.
Kunlun executive director Zhao Zhongxun, who is also deputy general manager of PetroChina’s planning department, said the operating import terminals in Rudong in Jiangsu province, Dalian in Liaoning province and Tianjin are undergoing expansion. They will have a combined annual processing capacity of 19 million tonnes.
The one under construction and financed by PetroChina in Shenzhen is expected to come on line in 2020, and will be acquired by Kunlun at a time that is best for both firms’ shareholders, he added.
The other proposed terminals will also be financed by PetroChina.