Norway aims to partner with China in LNG sector
Updated: 2011-12-05 15:43
By Matthew Fulco (chinadaily.com.cn)
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SHANGHAI - Norway seeks to use its energy and maritime prowess to help develop China's burgeoning liquified natural gas (LNG) sector.
The Nordic nation is the second largest exporter of natural gas after Russia and a preeminent shipping power, with 10 percent of the global merchant fleet.
Norwegian companies have expertise in LNG transportation, distribution, engineering and management. They hope to leverage this experience to supply vessels and onboard equipment to Chinese shippers and work with them to jointly develop advanced maritime technologies.
"As maritime and energy nations, China and Norway have a strong foundation for continued cooperation," said Svein Saether, the Norwegian ambassador to China.
Natural gas plays a key role in energy targets set in China's 12th Five Year Plan (2011-2015), which forecasts that the fuel will more than double its share of the nation's primary energy mix from 4 to 8.3 percent by 2015. China would need to import approximately 50-60 billion cubic meters of natural gas in the next four years – both LNG and pipeline – to reach that target, according to a report on China's LNG sector issued by the Norwegian shipping classification company DNV.
China's LNG imports have increased 40 percent this year compared to last year and are expected to rise threefold from now until 2020, the report said.
China plans to have ready 14 LNG receiving terminals and 65 carriers by 2015 to support surging imports of the fuel, said Zhang Zhiping, DNV's China energy director of operations, at a conference in Shanghai on Monday exploring the potential for Sino-Norwegian cooperation in the LNG sector.
"Norwegian companies are adept at balancing LNG hardware and software, which makes them attractive to Chinese counterparts aiming to tap a deep industry knowledge base," Zhang said.
Yet since Norwegian firms are perceived as costly and face intense price competition with other foreign players, they must differentiate themselves, he added.
Zhang suggested Norwegian companies harness their distinct competitive advantages, such as LNG-fueled vessels. Norway currently operates 20 of these ships, including four offshore supply vessels and three coast guard patrol boats.
"Norway is one of the few places in the world where a small scale LNG cluster is operational," said Gunn Ovesen, chief executive officer of Innovation Norway, a Norwegian government bureau that supports the Nordic country's enterprises and industry.
Norwegian firms could also provide advisory services to manage potential safety and environmental risks associated with the growth of China's LNG industry, said Ida Skard, director general of the Norwegian Ministry of Trade and Industry.
China's demand for LNG imports may fall if commercial unconventional gas production expands faster than expected after 2020, Zhang said.
Shale gas production in the United States has surged in recent years, significantly reducing the US's need for LNG imports.
China's shale gas reserves are larger than the US's and are expected to reach commercial extraction by 2015.
Yet more plentiful and inexpensive domestic gas production could benefit China's LNG importers by offsetting their high procurements costs, according to a paper issued by FACTS Global Energy for the Pacific Energy Summit in February.
This could ultimately increase Chinese demand for imported LNG, the paper said.