PetroChina focuses on Central Asia, Russia for fuel imports to help 300 million people

China National Petroleum Corp, the country's largest oil and gas company, has stepped up efforts in recent years to import more gas from Central Asian countries and Russia.

The China-Central Asia natural gas pipeline built by the company, which runs through China, Turkmenistan, Kazakhstan and Uzbekistan, has transported 270 billion cubic meters of natural gas to China since it was put into operation some 10 years ago, said the company, which is also known as Petro-China.

The current capacity for annual natural gas transmission from Central Asia to China is up to 55 billion cu m. The pipeline, the country's first transborder energy channel that brings gas from abroad over land, represents more than 15 percent of yearly national gas consumption. It benefits more than 300 million residents from 27 provinces on the mainland and Hong Kong Special Administrative Region, it said.

Bloomberg Intelligence data show China's dependence on imports to meet domestic gas demand is expected to rise to 75 percent in 2020 from 57 percent in 2017. PetroChina has been diversifying its transborder gas transport and construction of cross-border natural gas pipelines in recent years.

To ensure adequate gas supply for the biggest gas-consuming nation worldwide, PetroChina has been diversifying its channels to import more gas from abroad, including conventional gas, shale gas, tight gas and coal bed gas.

It has forged a variety of gas cooperation deals and undertaken investments with foreign players in recent years, and is set to have its gas production growth surpass that of oil between 2018 and 2020.

A second line for the China-Russia oil pipeline began commercial operation in January, raising China's annual imports of crude oil from Russia through the pipeline from 15 million metric tons to 30 million tons.

The China-Russia East-Route Natural Gas Pipeline, which is still under construction, is expected to begin gas supplies within this year, according to the Ministry of Commerce. The new pipeline will introduce 38 billion cu m of gas from Russia each year after completion.

It is expected to reduce carbon dioxide emissions by up to 164 million tons, sulfur dioxide emissions by 1.82 million tons and nitrogen dioxide emissions by 460,000 tons.

The Yamal liquefied natural gas project in the Arctic region of Russia, a joint venture of PetroChina and Novatek, Russia's independent natural gas producer, also foresees much of its output being supplied to China and other Asian countries after its completion by the end of this year.

Being the world's first integrated project for polar natural gas exploration, development, liquefaction and transportation, Yamal produces 16.5 million tons of LNG each year. What is shipped to China now accounts for 10 to 15 percent of the country's annual LNG imports, said the company.

It has substantially diversified the country's gas import channels and increased the percentage of LNG in the country's gas imports, said PetroChina.

Analysts said gas-rich countries like the Central Asian nations and Russia will play a significant role in the natural gas trade cooperation with China in the future.

China is likely to see continuous growth in natural gas imports as the domestic production and pipeline imports might not satisfy the country's growing gas appetite, said Li Li, energy research director at ICIS China, a firm providing analyses of China's energy market.

The complementary roles as importer and producer of natural gas have created win-win deals that could bridge the demand-supply gap among many countries.

China has been a strategic partner and top buyer of abundant oil and gas resources from Russia and Central Asia. Support from Chinese financial institutions such as the China Development Bank also helped deepen bilateral cooperation, she said.

Bloomberg Intelligence data showed that pipeline gas imports from Central Asia and Russia into China are expected to reach 85 billion cu m by 2020.

According to Li, increasing demand in China has helped forge robust energy industry relations, particularly in the field of natural gas, between the country and Russia, Kazakhstan and Uzbekistan in recent years.

To further facilitate the trade, it is necessary to upgrade the country's pipelines, storage facilities and transportation networks to ensure adequate and timely gas supply, she said.