UNCONVENTIONAL GAS AND LNG: THE YIN AND YANG OF CHINESE NATURAL GAS PLANNING

摘要

China's latest Five-Year Plan shows ambitious targets for CBM and shale gas - 30 bcm of CBM in 2015 and 50 bcm in 2020, and 6.5 bcm of shale gas in 2015 and 60-100 bcm in 2020. But China's Five-Year Plan has historically overestimated CBM production. The shortfall spurred China's entry into the LNG industry as it was forced to look abroad for gas resources to close the supply gap in its plan. History could repeat itself in the new Five-Year Plan considering various potential problems with shale gas development. This potential shortfall could require China to secure more gas from other sources, including LNG. With this hypothesis, Poten will test the likelihood of how LNG imports might be boosted or reduced, and how unconventional gas production may force China to alter its plans. Moreover, losses generated by regulated (subsidized) retail gas prices could hinder growth of LNG import terminals. The capped prices may be causing project developers to re-evaluate terminal development plans, and to focus more on expansion of existing terminals and improved efficiency rates. Poten will discuss the economics of subsidy, and how they could complicate Chinese efforts to shift back toward LNG to expeditiously deal with emerging supply shortfalls due to shale gas underperformance.