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The bet of Russia's energy giant Gazprom on gas supplies to China might become a failure, according to Russian daily newspaper Vedomosti.
The State Planning Commission of China suggests that the country's gas consumption will exceed 360 bcm by 2020. However, China National Petroleum Corporation (CNPC) expects that the demand will reach 334 bcm at best, and will not exceed 269 bcm at worst.
The officials state that China will import 75-80 bcm of pipeline gas by 2020. As of today, it gets the pipeline gas from Turkmenistan and Myanmar. At the same time, China is planning to launch the supply of small volumes of gas from Russia through the Power of Siberia pipeline. According to a 30-year contract, Gazprom will be selling to China up to 38 bcm of gas annually.
Read alsoNaftogaz to raise claims against Gazprom to almost $24 blnBy 2030, China wants to extract 270-346 bcm of its own gas (depending on the progress in the development of shale gas), while importing 120-130 bcm via pipelines and another 70-80 bcm of LNG (including from Russia).
Gazprom is planning to increase its share of the Asia-Pacific region in its total export volume from current 7% to 19% by 2020, according to Russian news agency TASS, with reference to the conpmany's chairman of the board Viktor Zubkov. By 2035, this figure will reach 35%, Zubkov said at the 10th Eurasian Forum Kazenergy.
It turns out that, even if other countries do not increase their supplies of pipeline gas to China, Gazprom will only deliver 40-55 bcm or less per year.
Read alsoGazprom and Rosneft postpone Arctic drilling amid sanctionsIt was expected to revise the forecast of the demand as the Chinese economy has been slowing down. Earlier forecasted triple-fourfold increase in consumption by 2020 is now seen not possible. It may just double, according to portfolio manager of the Financial Group Sergei Vakhrameev. But even this growth is likely to allow Gazprom increasing supplies up to 60 bcm. The question is, how the company will benefit, the expert says.
In addition, Japan, Asia's largest consumer of LNG, is waiting for a radical change in gas pricing, Deputy General Manager of Tokyo Gas Yasunobu Ohno said. After the accident at the Fukushima nuclear power plant, Japan had to plenty of expensive LNG for its thermal power plants. The companies expected that the demand would grow. But the state has decided to resume operations of part of the plant. The first unit was launched in August of this year, while another five are said to comply with the new rules. Besides, the applications have been submitted for 25 units, according to Ohno's presentation.
Read alsoChina finishes PutinIf gas is not competitive, the demand in Japan will reduce from the current 90 million tonnes of LNG per year to about 60 million tonnes by 2030, Ohno predicts. Japan, as well as European consumers, is expecting a softer approach of Russian suppliers to the 'take-or-pay' condition," Ohno said.
And as well as Europe, Japan relies on energy conservation and renewable energy, says Toshihiko Fujii, Director-General of the Ministry of Economy, Trade and Industry of Japan.