commercial production quickly. PetroChina joined Shell to ac-
quire Australian CBM producer Arrow Energy for US$3.1 billion last March, and then announced its intention in Feb- ruary to buy half of EnCana’s western Canada tight gas assets for more than US$5 billion – the largest Chinese in- vestment in unconventional gas assets yet. PetroChina said that the EnCana
deal represents a platform for entering the North American market. However, the field’s proximity to the Kitimat nat- ural gas terminal on the Canadian west coast suggests there is the longer-term potential to ship gas back to China. Te owner of Kitimat, Apache Corporation, began refitting the import terminal for export last year. Although PetroChina is pumping
money and resources into unconven- tional gas, the segment accounts for just a fraction of the company’s business. To meet China’s short-term demand for gas, PetroChina has sunk substantial invest- ments into the construction and supply of cross-border pipelines for natural gas in the country’s interior as well as import terminals along the coast.
Gassing up
China natural gas production, 1990-2035 6
4 2 0 Source: IEA Given these holdings, developing un-
conventional gas would run counter to the company’s commercial interest, sug- gested Tompson of Wood Mackenzie. A surge in unconventional gas production would likely depress gas prices, as it did in the US. “PetroChina has a significant volume
of pipeline gas that is relatively expensive. It has to find a market for that gas, and it will need to sign additional contracts in 2011, 2012 and 2013. In order to find a strong market, the company wants gas prices to continue to rise,” Tompson said.
PetroChina declined to comment to China Economic Review when con-
tacted for this story. Tough Beijing has set aggressive
targets for developing unconventional energy, a recent IEA report stressed that profits, rather than government direc- tives, steer the policy of China’s national oil companies, especially in upstream in- vestments and operations. “Tese are far from puppet companies
1990 2000 Other (conventional) 2007 2020 2025 2035 Tight gas, shale gas, coalbed methane (unconventional)
operating under control of the Chinese government, as many have assumed,” said IEA analyst and report co-author Julie Jiang. “Teir investments in recent years have been driven by a strong commercial interest, not the whim of the state.”
Talk the talk
But even if other commercial interests take precedence over unconventional energy, it may be in the interest of both the Chinese government and national oil companies to keep up the big talk about unconventional gas. Aggressive targets for domestic production can serve as a bargaining chip in negotiations for long- term supply contracts with Russia and other gas trading partners. China is set to finalize terms in 2011 for natural gas piped from Russia’s Si-
China Economic Review • May 2011
33
trillion cubic feet
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68