Transportation: the key to ease the contradiction between natural gas supply and demand

The "Natural Gas Utilization Policy" formally promulgated and implemented this year puts forward that we must balance supply and demand, strengthen demand management, increase supply capacity, ensure stable supply, regulate and control prices reasonably, and strictly manage projects. According to industry insiders, the introduction of this policy will, to a certain extent, ease the current imbalance between natural gas supply and demand. However, the transportation issue is still the key point to resolve this contradiction.
In the “Eleventh Five-Year Plan” for energy, natural gas is the fastest growing energy source. The major oil companies PetroChina, Sinopec and CNOOC have made continuous breakthroughs in natural gas exploration and production in recent years. Among them, CNPC has found a lot of natural gas reserves in the Sichuan and Daqing regions, Sinopec in the northeastern region of Sichuan, and CNOOC in the deep sea waters of the South China Sea, which has led people to expect that the imbalance in supply and demand of natural gas in the country may be expected to improve.
Yin Xiaodong, an energy analyst, pointed out that the bottleneck that restricts domestic natural gas supply is not entirely due to insufficient production, but to poor transport. How to transport natural gas resources through pipelines to the southeast region where the demand is huge and the gas fields are scarce is a problem. Although several large-scale long-distance natural gas pipelines have been successively built and put into operation, and the domestic natural gas market has developed rapidly, the growth rate of natural gas supply still lags behind the increase in demand. After more natural gas pipelines are built in the future, the problem of unbalanced natural gas supply and demand can be resolved to a greater degree.
Yin Xiaodong believes that the new natural gas utilization policy is only a guiding policy that can prevent waste in the use of natural gas, such as suppressing the use of natural gas to produce methanol, ethanol, etc., in the chemical industry, and encourage civilian use, so it will not necessarily significantly improve the current contradiction between supply and demand.
It is understood that the plan for the second West-East Gas Pipeline has basically been determined in August this year. The preliminary plan is that the designed gas transmission line for the second line of the West-East Gas Pipeline will have a gas transmission capacity of 30 billion cubic meters per year. The plan is to start all lines in 2008 and complete the ventilation in 2010. The second line of the West-East Gas Pipeline starts from the Xinjiang Uygur Autonomous Region and ends at Guangzhou. The main source of gas supply is the introduction of natural gas from Central Asian countries such as Turkmenistan and Kazakhstan, and is transported to Guangdong Province and other provinces with severe shortage of gas in the south of China. It is reported that this pipeline has a total length of 6,500 kilometers, which is nearly twice as long as the first West-East Gas Pipeline.
However, people in the industry pointed out that even if the supply of gas fields in the future is sufficient and pipeline transportation is completed, it is not entirely unnecessary for imports. Because natural gas is transported from the far northwest to the southeast, it may cost more than LNG from Australia. Therefore, LNG is an important way to solve the current contradiction between supply and demand.
Industry sources predict that natural gas demand in the eastern region will reach 136 to 180 billion cubic meters in 2020, accounting for more than 60% of the country's natural gas demand, and 20% to 40% of the natural gas demand in the eastern region will be supplied by LNG.
In recent years, CNOOC has initiated or signed three contracts for the import of liquefied natural gas in China. The three liquefied natural gas receiving stations are located in Guangdong, Fujian and Shanghai respectively. According to the current plan, by 2020, together with the scale of CNPC, Sinopec and CNOOC, China will import at least 60 million tons of liquefied natural gas every year, equivalent to importing 80 million tons of oil. In addition, CNPC plans to import 3 million tons of liquefied natural gas from Australia each year. Shell will supply 1 million tons of it, and another 2 million tons will come from Woodside Petroleum. This is the first LNG gas source implemented by CNPC.
In spite of this, the transportation problem cannot be solved, and “far water” still cannot solve “near thirst”.

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