China pow­ers up on over­seas elec­tric­ity in­vest­ment projects An­a­lysts say na­tion is charg­ing ahead with strate­gic pur­chases abroad in en­ergy sec­tor

China Daily (Hong Kong) - - BUSINESS - By ZHENG XIN zhengxin@chi­nadaily.com.cn

An­a­lysts said the startup of China’s big­gest power project in Rus­sia points to ex­pand­ing and in­creas­ingly im­por­tant deals in the power sec­tor be­tween the two coun­tries, and also sig­nif­i­cantly ex­pand­ing in­vest­ments by China in power projects in­ter­na­tion­ally.

Hua­dian power plant — with a to­tal in­vest­ment of $571 mil­lion — is in Yaroslavskaya Oblast in Rus­sia. It started op­er­at­ing on June 21, and is the suc­cess­ful re­sult of a project launched by China Hua­dian Hong Kong Co Ltd and Rus­sian re­gional power com­pany TGC-2 in 2011.

“The com­mis­sion­ing of the Hua­dian and TGC-2 joint ven­ture gas­fired power plant is in ac­cor­dance with the strat­egy of Chi­nese com­pa­nies go­ing abroad and the Belt and Road Ini­tia­tive,” said Joseph Jaco- belli, a se­nior an­a­lyst of Asian util­i­ties and in­fra­struc­ture at Bloomberg In­tel­li­gence.

“It’s also part of a clear ef­fort by Chi­nese power groups to di­ver­sify their earnings sources and these in­vest­ments are un­likely to slow down in the fu­ture,” he added.

The 483 mW gas-steam com­bined heat and power plant, China’s largest elec­tric­ity project in Rus­sia through a China-Rus­sia joint ven­ture, is de­signed to gen­er­ate 3.02 bil­lion kilo­watt hours of elec­tric­ity and 814,000 gi­gawatts of heat­ing sup­ply an­nu­ally, said China Hua­dian.

“It is just a mat­ter of iden­ti­fy­ing at­trac­tive projects in terms of in­vest­ment re­turns and of course the project also has a strate­gic agenda,” Ja­co­belli said.

“Not only is Rus­sia a key neigh­bor but it is also an im­por­tant near term source of nat­u­ral gas, a fuel which is very high on China’s agenda.” mil­lion

Listed as a pri­or­ity project in 2014 by Rus­sian ad­min­is­tra­tive au­thor­i­ties, the new CHP plant is ex­pected to tackle the Rus­sian prov­ince’s power short­ages, bring down its power deficit from 40-50 per­cent to 5-15 per­cent and fully cover its to­tal power de­mand in warmer months.

For some time China has been a strate­gic part­ner of Rus­sia in in­vest­ment deals, es­pe­cially in the en­ergy sec­tor.

Wen Shugang, gen­eral man­ager of China Hua­dian Corp, said his com­pany would de­vote more ef­forts to ex­plor­ing in­ter­na­tional en­ergy mar­kets in the fu­ture, in­clud­ing Rus­sia.

Li Li, en­ergy re­search di­rec­tor at ICIS China, a con­sult­ing com­pany that pro­vides anal­y­sis of China’s en­ergy mar­ket, said the two coun­tries have al­ready agreed upon var­i­ous en­ergy deals in re­cent years.

Cit­ing China Na­tional Petroleum Cor­po­ra­tion’s 2013 ac­qui­si­tion of a 20 per­cent stake in the Ya­mal LNG project lo­cated in the Arc­tic re­gion of Rus­sia and Sinopec’s pur­chase of a 10 per­cent share in Rus­sia’s largest gas pro­cess­ing and petro­chem­i­cals com­pany Sibur, Li said China was al­ready ac­tive in Rus­sia’s Far East re­gional de­vel­op­ment.

The Ya­mal project, the world’s first in­te­grated project for po­lar nat­u­ral gas ex­plo­ration, de­vel­op­ment, liq­ue­fac­tion and trans­porta­tion, is ex­pected to be­gin op­er­a­tions this year, ac­cord­ing to No­vatek, the nat­u­ral gas pro­ducer in Rus­sia re­spon­si­ble for the project.

Much of Ya­mal’s out­put will be sup­plied to China and other Asian coun­tries.

“In ad­di­tion to be­ing a strate­gic part­ner, China is also a top buyer of Rus­sia’s abun­dant oil and gas re­sources,” Li said.

to­tal in­vest­ment in Hua­dian power plant in Yaroslavskaya Oblast in Rus­sia

EVGENY SINITSYN / XIN­HUA

A tech­ni­cian mon­i­tors equip­ment at the cen­tral con­trol of­fice of the Hua­dian power plant in Yaroslavskaya Oblast, Rus­sia. It is China’s largest elec­tric­ity project in Rus­sia, and is a China-Rus­sia joint ven­ture be­tween China Hua­dian Hong Kong Co Ltd and Rus­sian re­gional power com­pany TGC-2.

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