As China transitions from coal energy to liquefied natural gas, it is making its way towards becoming the largest import market for natural gas in the world. LNG is, of course, considerably more environmentally friendly than coal. China is importing Russian LNG from the Arctic via shipments from above the Arctic Circle, which travel the Northern Sea Route, which is available for open shipping use during the summer months. Additionally, in the future, China will begin receiving its gas from Russia via a new pipeline, known as the ‘power of Siberia’ pipeline, which will traverse some 3,000 kilometers and is expected to come online in late 2019. China expects Russia to play a major role in China’s energy reform and to become China’s leading LNG supplier.
CGTN reports:
With its crackdown on pollution, China is on track to become the world’s biggest importer of natural gas, a much cleaner energy alternative to coal. Fueling that rise in imports coming from above the Arctic Circle is a massive liquefied natural gas production facility in Russia.
The Yamal plant is the world’s largest liquefied natural gas project operated above the Arctic Circle.
Exploitable natural gas reserves there are estimated at 1.3 trillion cubic meters.
After 23 days at sea, a Russian tanker arrived in East China’s Jiangsu Province, delivering the first direct shipment of natural gas from the North Pole.
For the first time, the shipment came via the Northern Sea Route which can be only used during summer months, after the thicker winter ice has melted.
It cuts travel time almost in half, as it’s about 13,400 kilometers (over 8,300 miles) shorter than the traditional eastern route via the Suez Canal.
Beijing hopes the latest gas deal with Moscow will contribute to China’s energy reform.
PetroChina’s Zhang Chenwu, who is in charge of the company’s international business, describes the project as a joint effort made possible by the ample resources in Russia, the steady market in China, and the high-end technologies Western countries use to produce liquefied natural gas (LNG).
China owns a nearly 30 percent stake in the $27 billion Russian operation, and Russia has big ambitions for Yamal and its service to China.
Beijing believes that in the next 10 years, the bilateral trade volume of natural gas between China and Russia will exceed 70 billion cubic meters, and that Russia will become the largest natural gas supplier to China.
The opening of the Northern Sea Route comes at a time when China faces challenges in its energy sector reforms, shifting from coal-fired power to gas, a much cleaner energy.
But that policy led to a gas shortage in the north last winter, and officials are working to avoid that situation again.
Another project underway toward that end is a 3,000 kilometer (over 1,800 miles) gas pipeline known as the “Power of Siberia” linking Russia to China. It’s due to come online by the end of 2019, and there’s already talk of a second parallel pipeline along the same route.
As for the output from Yamal, China has so far received two shipments from the Arctic. A third tanker is expected to reach the coast of northern China in the coming days.
As a leading energy supplier, Russia is also in the midst of constructing another pipeline into Europe which will travel to Germany across the Baltic Sea. Given the current geopolitical environment, it is opposed by Washington and other NATO members for the political ramifications of a possible energy deal between Berlin and Moscow, as well as the specter of some degree of energy dependence on the Russians. From an economic perspective, Russia is perceived by the Americans as a competitor in the LNG business, as America seeks to secure markets for its shale gas, although more than twice as expensive as Russian LNG. The Nord Stream 2 pipeline project, by traversing the Baltic, bypasses the Ukraine, meaning that the eastern European nation would miss out on billions of dollars worth of transit fees, which Kiev is accustomed to assessing on an annual basis. However, the pipeline is going through, and, whether NATO likes it or not, Russia is quickly becoming the dominant energy supplier in the hemisphere.
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