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HomeLatest NewsSinopec accelerates China's race for gas sovereignty with new fields

Sinopec accelerates China’s race for gas sovereignty with new fields

Date: July 18, 2024 Time: 13:12:13

Sinopec is at the forefront of China’s national gas strategy as the Asian giant tries to reduce its dependence on imports from Russia, the US and Australia. After what happened last winter, when Beijing had to boost the use of coal for the generation of electricity and heating, the Xi Jinping government is accelerating its planes to develop its own gas industry that allows it to protect its sovereignty against energy.

In this context, the Chinese multinational announced on Monday that it has certified 30,500 million cubic meters of natural gas in the field it is developing in the Sichuan basin, a region in western China where the Yangtze River rises and which is reinforced as key region of energy production for the country. In addition to its network of hydroelectric plants (the Three Gorges Dam in Hubei being the most relevant), the river will have a logistical role for gas.

Sinopec’s new field, which has received the go-ahead from the Ministry of Natural Resources, has brought the company’s total proven geological reserves in the Sichuan basin to 154.7 billion cubic meters of gas, Reuters reported. It is the equivalent to half of the annual consumption of this fuel by China, the largest net importer of gas in the world.

It is unconventional gas that is extracted by hydraulic fracturing of sandstone. According to Reuters, the Sichuan basin is one of China’s largest sources of natural gas, along with the Erdos basin in the north, where state-owned PetroChina controls oil drilling, and the offshore Bohai Bay basin, where CNOOC operates. .

Until last year, the Asian giant was the third largest buyer of this fuel from the US since in 2016 the American fracking industry became a net exporter of liquefied gas (LNG) to Europe and Asia. But with the start of the war in Ukraine, Spain overtook China as a US gas customer in the accumulated since 2016, as published by ‘La Información’. Now Beijing seeks to replicate the US model by extracting its own gas.

strike in australia

Sinopec’s announcement was made in a context of rising natural gas prices in the markets as a result of the threat of a new strike in the gas sector in Australia for September. The former British colony is one of the preferred sources of supply for Asia and China, but for weeks it has been causing problems for the supply of gas due to strikes between workers at Woodside Energy and Chevron that operate some of the main fields.

Dutch TTF gas futures shot up 10% to over 40 euros per megawatt-hour, due to Australian uncertainty that may make US gas reaching Europe more expensive due to competition with Asia. Not even the reports from the European Union (EU) announcing that it has already ensured the filling of its strategic reserves for the winter expect to appease the operators of the gas sector. Nor did the Chinese discovery calm things down, despite the fact that this will reduce demand for gas in the medium term.

Despite the rebound in gas prices registered in the last month -which is on track to double its price and reach an eight-week high-, experts recall that the market is currently oversupplied due to lower demand and idle capacity for Russia that fails to place after the progressive decline in its shipments to Europe, except to Spain. In this case, the possibility of an episode of tension in the gas supply is still not ruled out, but it will have a limited impact on prices. Also, Australia is not a regular supplier to Europe.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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