(P&GJ) – China plans to accelerate the development of its gas pipelines infrastructure in the years to come despite lessening domestic demand for gas in the domestic market and the existing problems in the country’s national economics.
The ongoing trade wars with the U.S. has not gone unnoticed for China and its industrial sector. According to data from the Chinese National Bureau of Statistics, the country’s manufacturing activity shrank for the third straight month in June, highlighting pressure on policymakers to boost domestic demand and to take additional measures to support domestic economics.
That also posed a threat to an ambitious target, which was set by China’s prime minister, Li Qiang, in March for the growth of about 5% of the Chinese national GDP this year.
The current problems in the Chinese economy and the ever-growing share of renewables in the overall energy structure, create additional difficulties, both to the country’s gas producing and transmission sectors.
Concerning transmission, since the establishment of the first gas pipeline in the country, which was the Bayu Line, during the 1960s, China has made great progress in natural gas pipeline construction. Still in recent years the growth rates of the industry have significantly slowed down. That means the country will unlikely go ahead with the implementation of its earlier announced plans to almost double of its natural gas network in the coming years.
Such plans were earlier announced by Ding Zhimin, the former deputy director of the of the Legal and Institutional Reform Department of the Chinese National Energy Administration. These plans called for China to spend 11 trillion to 13 trillion yuan ($1.53 trillion to $1.81 trillion) for a significant expansion of total mileage of in the natural gas pipeline network, currently estimated at about 93,205 miles (150,000 km) with a daily supply capacity of over 1 Bcm.
Most analysts believe the current length of the Chinese gas pipelines’ network is insufficient for the nation, which means that its expansion should become a priority both forthe government and major local pipeline operators.
In fact, implementation of these plans was supposed to be completed already in 2025, with partial dependence tied to cooperation from Russia, particularly in regard to its Sila Sibiri 2 project. The prospects for that pipeline with the overall capacity of 50 billion cubic meters per year (Bcm/yr) was reportedly discussed during the recent visit of the Chinese leader Xi Jinping to Moscow, which coincided with the celebration of Victory Day.
However, according to some Russian media reports and unofficial sources, the talks with Putin did not bring any serious progress and the project did not appear likely to resume. The main reason for the lack of accord seemed to center on disagreements over pricing. (Chinese apparently asked for purchasing prices similar to those for domestic Russian customers).
As The Wall Street Journal earlier reported during its coverage of the 12 day-conflict between Israel and Iran, the Chinese considered plans to refocus on the Sila Siberi 2 project due to possible interruptions of gas supplies from the Persian Gulf region, particularly Qatari LNG and the existed high threat of closure of the Strait of Hormuz. However, due to the end of hostilities, these plans were never implemented.
As the increase of gas supplies from Russia (and associated with this building of necessary pipelines’ infrastructure) will not be a priority for the Chinese government for at least in the middle term, a particular attention will be paid for the development of domestic gas pipelines’ infrastructure.
According to the Chinese National Development and Reform Commission (NDRC), 2025 marks the final year of the country’s 14th Five-Year Plan (2021-2025), making it crucial to balance gas production and transmission industrial system within the country, which eclipsed the annual domestic gas production target of 230 Bcm.
In fact, by 2024, China’s gas production had already reached 246.4 Bcm, according to initial data from the Chinese National Bureau of Statistics. The bureau expects the nation’s gas consumption level to reach about 600 Bcm by 2030.
As for midstream infrastructure, part of the plan is to accelerate the expansion of key gas pipeline networks of the country, such as the West-East Natural Gas Pipeline, the Sichuan-East Natural Gas Pipeline and the China-Russia Natural Gas Pipeline Eastern Route (Sila Siberi 1).
In general, China has great potential for the further expansion of its gas pipelines’ network, in part due to the its sparse current infrastructure in comparison with other industrial nations.
The plan looks to build of new infrastructure at an accelerated rate, particularly construction of large-scale projects 620 miles (1,000 km) or more that will transport cargos eastward and southward.
China’s natural gas resources are mainly distributed in its vast western region, while the economically more developed central and eastern regions face a shortage of natural gas. In order to address this imbalance, the Chinese has vigorously emphasized the construction of natural gas infrastructure in recent years.
In particular, the trunk gas transmission pipelines, such as West-to-East Gas Transmission and North-to-East Gas Transmission have established a complete regional pipeline network in Sichuan and Chongqing, North China, the Yangtze River Delta and the Pearl River Delta. It is anticipated that new infrastructure will be built with the aim to better connect the western and eastern parts of the country and to ensure stable gas supplies to gas-hungry cities and provinces of the country.
One such projects involves building of the last the fourth section of the Central Asia-China pipeline. The Central Asia-China pipeline is a network of natural gas pipelines that transport natural gas from Central Asian countries – primarily Turkmenistan, Kazakhstan and Uzbekistan – into China.
With a 55 Bcm capacity, 1,140-mile (1,833-km) Central Asia–China Gas Pipeline, currently comprises three sections (Lines A, B, and C), running from Turkmenistan through Uzbekistan and Kazakhstan to China’s Uygur Xinjiang Autonomous Region. From there, the pipeline links up with the West-to-East Gas Pipeline in China.
According to experts of Lowy Institute, the ongoing construction of the new Line D pipeline, extending from Turkmenistan to Xinjiang, is expected to increase the network’s total annual capacity to 85 Bcm.
Currently, Turkmenistan, with a population estimated at just under 6.5 million, is China’s single biggest supplier of natural gas, followed by Russia. Last year, China imported 35 Bcm gas (valued at $10.3 billion) via three pipelines from Turkmenistan, along with 16 Bcm from Russia ($4 billion).
Building of this pipeline, along with other infrastructure projects in this field, will be carried out as part the existing Medium- and Long-Term Pipeline Network Development Plan, which was initially released in May 2017 and created a legislative framework for natural gas pipeline construction.
In the meantime, in addition to natural gas, particular attention will be paid for the establishment of transmission infrastructure for hydrogen supplies. As part of these plans, China is set to construct an extensive pipeline network from its wind and solar energy-rich northern and northwestern regions to the southern and eastern markets.
According to statements of Li Guohui, vice president of China Petroleum Pipeline Engineering Corporation, these plans are mainly due to the projected surge in hydrogen demand in the country, which is expected to reach 100 mtpa by 2060. P&GJ