China has lifted restrictions on foreign investments in all energy sectors, including fossil fuels, new energy sources, and electricity generation excluding nuclear power, the country's State Council Information Office said in a white paper published on Monday.
The paper, 'Energy in China's New Era', discussed the steps the world's largest oil importer has taken to reform access of foreign companies to its energy industry, saying that "Market access for foreign capital in the energy sector has been extended, private investment is growing, and investment entities have become more diverse."
"China has accelerated reforms such as the deregulation of the oil and gas exploration market and the circulation of mining rights, reform of the pipeline network operation mechanism, and the dynamic management of crude oil imports," the Chinese government said in the white paper.
In 2019, China lifted restrictions on foreign investment in oil and natural gas exploration and production, opening its oil and gas sector to foreign participation without a requirement to form joint ventures with local companies. The government also removed last year the access restrictions to construction and operation of pipeline networks for gas and heat supply in cities with a population of more than 500,000 residents.
The country is now promoting the energy industry in pilot free trade zones such as Guangdong, Hubei, Chongqing, and Hainan, and supports further opening up of the entire oil and gas industry in the China (Zhejiang) Pilot Free Trade Zone.
China, a major importer of natural gas, is also looking to attract investments in shale gas developments by easing restrictions on foreign entities and subsidizing costs in a bid to boost its natural gas production while its demand continues to grow.
Faced with rising natural gas and liquefied natural gas (LNG) imports to meet growing demand, China is trying to raise its domestic gas production, including by setting up incentives for shale gas and coalbed methane production.
By Tsvetana Paraskova for Oilprice.com
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Comments
The growing dependence on oil and gas imports has created an increasing sense of ‘energy insecurity’ among Chinese leaders who tend to believe that dependence on imported oil and gas leads to great ‘strategic vulnerability’.
That is why China has announced today the lifting of restrictions on foreign investments in all energy sectors, including fossil fuels, new energy sources, and electricity generation excluding nuclear power in order to enhance exploration, increase domestic energy production and reduce dependence on imports.
Faced with rising natural gas and liquefied natural gas (LNG) imports to meet growing demand, China is urgently trying to raise its domestic gas production, including shale gas and coalbed methane production. Just very recently PetroChina announced the discovery of a natural gas field with reserves in excess of 100 billion cubic meters.
China’s dependence on oil and gas imports has been phenomenal. In 2020 crude oil imports accounted for 77% of its consumption and this is projected to rise to 87% by 2030.
China’s gas demand is projected to grow by 33% in the next six years from 283 bcm in 2018 to 376 bcm by 2023 with LNG imports rising by 26.5% from 73.5 bcm in 2018 bcm in 2017 to 93 bcm in 2023.
Back in 2010, imports accounted for just 15% of China's natural gas supply. By 2018, the share of imports in the country's gas supply surged to nearly half—45% of the total supply. As consumption has been vastly outpacing domestic natural gas production.
China became the world’s top natural gas importer - including LNG and piped gas- in October 2018. It is set to overtake Japan as the top global LNG importer by 2022.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London