China’s Gas Supply Triumph: Balancing Act Between Market Advantage and Transition towards Net Zero

Viewpoint | China has established a commendable gas reserve. However, it now confronts a predicament

Beijing must not fritter away its lead in the gas market, which could aid in transitioning the country away from coal towards achieving a net-zero carbon footprint.

The gas reserves have now expanded even more. Over the recent weeks, three major advancements have highlighted Beijing's aspirations in the natural gas sector. The commencement of Guangdong Energy Group's brand new LNG receiving terminal in Huizhou, Guangdong province, which is worth US$1 billion, is one such example.

In the meantime, Total Energies, a multinational corporation based in France, has declared a five-year extension of its sales and purchase contract with China National Offshore Oil Corporation, a state-owned entity. This agreement ensures the supply of 1.25 million tonnes of LNG each year until 2034.

In the previous month, news outlets in China reported that the country's first self-developed ultra-deep-water gas field, known as Shenhai Yihao or Deep Sea No 1, has entered its second operational phase. This is located in the waters southeast of Hainan, the southernmost province of China.

The abundant gas supply of China didn't just materialize out of thin air; it's the result of years of dedicated work, strategic planning, and considerable investment. As the globe's biggest LNG importer, China has secured supply agreements with leading producers like Australia, Qatar, Malaysia, and more.

Keeping pace, China has ascended to become the world's number two reseller of LNG, striking agreements with nations where prices are elevated to supplement deficiencies in their stock levels. Chinese energy corporations have also capitalized on this year's low LNG spot prices to augment supplies that would have otherwise been purchased by other countries.