Page 190 - 2018 White Paper on the Business Environment in China
P. 190
8 White Paper on the Business Environment in China
Trans-Asia Pipeline Co., Ltd. and Kazakhstan’s state Oil and Gas
KazTransGaz will jointly operate the 1,454-kilometer
pipeline. With an annual installed transportation capacity Crude oil and natural gas are fossil fuels that are used
of 6 billion cubic meters of gas, the pipeline is expected for heating. They are both formed from the remains of
to provide China with 5 billion cubic meter of natural gas dead plants and animals. Both oils have similar uses but
each year (Zheng). The start of gas flows at the southern may differ in the effect and outcome of their use. Crude
Kazakhstan natural gas pipeline followed news that oil, or petroleum, is a flammable liquid that consists of
talks over new routes for gas supplies to China from hydrocarbons and other organic compounds found
Russia have stalled while Beijing rethinks the balance of beneath the earth through oil drilling. Natural gas
its energy needs, including how much liquefied natural consists mostly of methane and hydrocarbons or ethane.
gas it might use. Gazprom, which is already building The
Power of Siberia pipeline from Eastern Siberia to China New funding for oil and gas made from crude oil
was in talks over two more routes: the so-called western was hard to come in 2016. That year, global investment
gas route and a gas pipeline from the Pacific Island of in upstream activities fell 23 percent. But 2017 was the
Sakhalin. There were no new developments on the two year of recovery for bearish oil markets. Even as gas
pipelines, whose combined capacity, if built, is seen consumption in China rose 22 percent YoY in April 2017,
adding up to another 40 billion cubic meters in possible experts worried that a drop in coal prices could tempt
gas supplies from Russia to China per year. According to some major consumers to revert to their old coal habit.
BP’s energy outlook to 2035, the share of pipeline gas Tian Miao of Beijing’s North Square Blue Oak Ltd said,
supplies to China, including from Russia, will remain “As coal prices look destined to drop to around 500 yuan
largely unchanged over the ten years from 2025, with the a ton … the conversion to natural gas will stop, and
share of liquefied natural gas and China’s own gas output some price-sensitive industrial users may even think of
significantly rising (Astakhova and Kobzeva). switching back” (Calcuttawala).
Supplies of natural gas from the U.S. accounted for The Central Committee of the Communist Party
almost 7 percent of liquefied natural gas imports in March of China and the State Council announced a reform
2017 alone, but all of it was supplied through intermediaries plan for the country’s oil and gas industry in 2017,
or spot deals, which China hopes to supplement with eyeing better efficiency and competitiveness by giving
larger and more direct import volumes. A trade deal market a decisive role in the sector. The reform plan
announced in May 2017 between U.S. President Donald states: “Market should play a decisive role in resource
Trump and Chinese President Xi Jinping encouraged allocation and the government role should be better
China’s investment and purchase of American natural gas. played in order to safeguard national energy security,
“The trade deal paves the way for Chinese support into U.S. boost productivity and meet people’s needs.” The
liquefied natural gas in both existing and potential future reform is also a key provision of the country’s 13th
projects,” said Kerry Anne Shanks, an analyst at Wood Five Year Plan for 2016-2020. The prime goal of mixed-
Mackenzie. That includes immediate liquefied natural gas ownership reform is to create a flexible and efficient
sales or signing long-term contracts to underpin financing market-oriented mechanism with the incorporation of
of new plants. China National Petroleum Corp. Chairman private shareholders, to improve the management of
Wang Yilin said that the country’s biggest oil and gas state-owned companies. According to the plan, efforts
company wants to import more U.S. supplies and will should be made to advance reshuffling of the oil and
consider participating in projects. China Petrochemical gas industry based on work specialization. Engineering
Corp (Sinopec)’s trading unit, Unipec, is considering the U.S., companies and oil and gas equipment manufacturers
among other producers, for possible long-term liquefied are encouraged to perform as independent enterprises.
natural gas contracts for supply starting around 2022, China’s oil and gas sector is dominated by three state-
Chen said.“U.S. gas will be the cheapest of all because they owned heavyweights: CNPC, Sinopec, and China
have abundant supply,”and the Trump-Xi trade agreement National Offshore Oil Corp (CNOOC). These companies
is encouraging liquefied natural gas shipments between have long been accused of monopolizing the oil and gas
the two countries, Zhu Xingshan, a Senior Director in the resources with redundant workers and low efficiency.
planning department of CNPC, said in Beijing. “Thus we Gas companies are expected to split sales and pipeline
should increase imports of U.S. liquefied natural gas” (We businesses in a step-by-step fashion in order to promote
Want Private). a market-based pricing mechanism. The result is that the
190
Trans-Asia Pipeline Co., Ltd. and Kazakhstan’s state Oil and Gas
KazTransGaz will jointly operate the 1,454-kilometer
pipeline. With an annual installed transportation capacity Crude oil and natural gas are fossil fuels that are used
of 6 billion cubic meters of gas, the pipeline is expected for heating. They are both formed from the remains of
to provide China with 5 billion cubic meter of natural gas dead plants and animals. Both oils have similar uses but
each year (Zheng). The start of gas flows at the southern may differ in the effect and outcome of their use. Crude
Kazakhstan natural gas pipeline followed news that oil, or petroleum, is a flammable liquid that consists of
talks over new routes for gas supplies to China from hydrocarbons and other organic compounds found
Russia have stalled while Beijing rethinks the balance of beneath the earth through oil drilling. Natural gas
its energy needs, including how much liquefied natural consists mostly of methane and hydrocarbons or ethane.
gas it might use. Gazprom, which is already building The
Power of Siberia pipeline from Eastern Siberia to China New funding for oil and gas made from crude oil
was in talks over two more routes: the so-called western was hard to come in 2016. That year, global investment
gas route and a gas pipeline from the Pacific Island of in upstream activities fell 23 percent. But 2017 was the
Sakhalin. There were no new developments on the two year of recovery for bearish oil markets. Even as gas
pipelines, whose combined capacity, if built, is seen consumption in China rose 22 percent YoY in April 2017,
adding up to another 40 billion cubic meters in possible experts worried that a drop in coal prices could tempt
gas supplies from Russia to China per year. According to some major consumers to revert to their old coal habit.
BP’s energy outlook to 2035, the share of pipeline gas Tian Miao of Beijing’s North Square Blue Oak Ltd said,
supplies to China, including from Russia, will remain “As coal prices look destined to drop to around 500 yuan
largely unchanged over the ten years from 2025, with the a ton … the conversion to natural gas will stop, and
share of liquefied natural gas and China’s own gas output some price-sensitive industrial users may even think of
significantly rising (Astakhova and Kobzeva). switching back” (Calcuttawala).
Supplies of natural gas from the U.S. accounted for The Central Committee of the Communist Party
almost 7 percent of liquefied natural gas imports in March of China and the State Council announced a reform
2017 alone, but all of it was supplied through intermediaries plan for the country’s oil and gas industry in 2017,
or spot deals, which China hopes to supplement with eyeing better efficiency and competitiveness by giving
larger and more direct import volumes. A trade deal market a decisive role in the sector. The reform plan
announced in May 2017 between U.S. President Donald states: “Market should play a decisive role in resource
Trump and Chinese President Xi Jinping encouraged allocation and the government role should be better
China’s investment and purchase of American natural gas. played in order to safeguard national energy security,
“The trade deal paves the way for Chinese support into U.S. boost productivity and meet people’s needs.” The
liquefied natural gas in both existing and potential future reform is also a key provision of the country’s 13th
projects,” said Kerry Anne Shanks, an analyst at Wood Five Year Plan for 2016-2020. The prime goal of mixed-
Mackenzie. That includes immediate liquefied natural gas ownership reform is to create a flexible and efficient
sales or signing long-term contracts to underpin financing market-oriented mechanism with the incorporation of
of new plants. China National Petroleum Corp. Chairman private shareholders, to improve the management of
Wang Yilin said that the country’s biggest oil and gas state-owned companies. According to the plan, efforts
company wants to import more U.S. supplies and will should be made to advance reshuffling of the oil and
consider participating in projects. China Petrochemical gas industry based on work specialization. Engineering
Corp (Sinopec)’s trading unit, Unipec, is considering the U.S., companies and oil and gas equipment manufacturers
among other producers, for possible long-term liquefied are encouraged to perform as independent enterprises.
natural gas contracts for supply starting around 2022, China’s oil and gas sector is dominated by three state-
Chen said.“U.S. gas will be the cheapest of all because they owned heavyweights: CNPC, Sinopec, and China
have abundant supply,”and the Trump-Xi trade agreement National Offshore Oil Corp (CNOOC). These companies
is encouraging liquefied natural gas shipments between have long been accused of monopolizing the oil and gas
the two countries, Zhu Xingshan, a Senior Director in the resources with redundant workers and low efficiency.
planning department of CNPC, said in Beijing. “Thus we Gas companies are expected to split sales and pipeline
should increase imports of U.S. liquefied natural gas” (We businesses in a step-by-step fashion in order to promote
Want Private). a market-based pricing mechanism. The result is that the
190
