China wary of relying on US gas exports, report suggests
A paper by the National Bureau of Asian Research in the US highlights political concerns in Beijing about relying on the US, which will prompt China to look instead to Australia and Canada for additional supplies of gas in volume.
Australia will overtake Qatar as the largest exporter of liquefied natural gas, which is transported by ships to end markets, from 2017, thanks to burgeoning demand, mainly in north Asia.
By that time, Australia will have the capacity to export an estimated 88 million tonnes of LNG annually, which could rise to 130 million tonnes since many projects being developed have ready expansion prospects.
However, a cost blowout in developing gas projects in Australia, coupled with access to cheap gas in the US on the back of the shale oil boom there, has opened the door to new suppliers emerging.
There are strong political concerns in Beijing about relying on the US for gas supplies, with Chinese companies more active in Canada and Australia as a result, especially since it can take large slices of equity in projects.
The slow pace with which Washington has approved LNG-export projects has reinforced the impression in Beijing that these decisions are political rather than commercial, the report noted.
Similarly, resource nationalism may limit China's interest in sourcing too much gas from Canada, as well.
"Combined with Washington's overall rebalancing [of foreign policy] to Asia, the politicisation of LNG could prove more trouble than it is worth," the report said.
At present, about 85 per cent of China's gas imports comes from five countries - Australia, Indonesia, Malaysia, Qatar and Yemen - to help limit supply disruption risk.
"Beijing has traditionally been wary of becoming over-reliant on any particular country for its energy needs, believing that such dependence would allow other powers to exert leverage," the report noted. "Given the relative abundance of cheap gas in the US, as the 'weaker' power in the relationship, China may feel that relying on the US for gas ... would further reduce its already limited leverage. In fact, virtually all the countries from which China receives gas are essentially resource states that would not be able to exert much political and economic leverage over China."
Additionally, China could receive gas by pipeline from central Asia, Myanmar and, possibly, Russia as it seeks a broad spread of suppliers to reduce risk.
Frequently Asked Questions about this Article…
China is cautious about relying on US gas exports due to political concerns. Beijing fears that dependence on the US could reduce its leverage and make it vulnerable to political decisions rather than commercial agreements.
China is cautious about relying on US gas exports due to political concerns. Beijing worries that dependence on the US could reduce its leverage and make it vulnerable to political decisions rather than commercial ones.
While there are concerns that US gas exports could impact Australian gas sales to China, these fears may be overblown. China is likely to remain wary of US gas, potentially favoring Australian and Canadian sources instead.
While there are concerns that US gas exports could undermine Australian gas sales to China, these fears may be overblown. China is likely to remain wary of US gas, potentially favoring Australian and Canadian sources instead.
Australia is set to become the largest exporter of liquefied natural gas (LNG) by 2017, surpassing Qatar. This is due to increasing demand, particularly in North Asia, and Australia's capacity to expand its LNG export capabilities.
Australia is set to become the largest exporter of liquefied natural gas (LNG) by 2017, surpassing Qatar. This is driven by increasing demand, particularly in North Asia, and Australia's capacity to export large volumes of LNG.
Australian gas projects face challenges such as cost blowouts in development. This, combined with the availability of cheap gas in the US due to the shale oil boom, has opened the market to new suppliers.
Australian gas projects face challenges such as cost blowouts during development. This, combined with the availability of cheap US gas due to the shale oil boom, has opened the market to new suppliers.
China is interested in sourcing gas from Australia and Canada due to political concerns about relying on the US. Additionally, Chinese companies are more active in these countries, often taking large equity stakes in projects.
China is interested in sourcing gas from Australia and Canada due to political concerns about relying on the US. Additionally, Chinese companies are more active in these countries, often taking large equity stakes in projects.
China imports gas from a diverse range of countries, including Australia, Indonesia, Malaysia, Qatar, and Yemen, to limit the risk of supply disruptions. This strategy helps China avoid over-reliance on any single country for its energy needs.
China's energy strategy involves diversifying its gas imports to limit supply disruption risks. Currently, about 85% of its gas imports come from five countries, including Australia, Indonesia, Malaysia, Qatar, and Yemen.
Resource nationalism can limit China's interest in sourcing too much gas from countries like Canada. China seeks to avoid over-dependence on any one nation to maintain its leverage and reduce political risks.
Resource nationalism may limit China's interest in sourcing too much gas from Canada, as it seeks to avoid over-reliance on any single country and maintain leverage in its energy relationships.
In addition to importing LNG, China can receive gas via pipelines from Central Asia, Myanmar, and potentially Russia. This diversification helps China spread its supply sources and reduce reliance on any single country.
Besides the US, China can receive gas by pipeline from Central Asia, Myanmar, and potentially Russia. This diversification helps China reduce its reliance on any single supplier and mitigate risks.
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