Imports of gas from Arctic to ease shortages

China’s annual imports from the Yamal natural gas project in the resource-rich Arctic region will further secure China’s energy security with increasing supplies of the natural gas, which is currently experiencing a severe shortage especially in northern China, said an executive from China National Petroleum Corp.

China’s imports from the Yamal project play a significant role in substantially boosting China’s oil and gas reserves, ensuring a steady, long-term supply, said Jiang Qi, general manager of the CNPC Russia, a subsidiary of CNPC, the country’s largest oil and gas producer by annual output.

China will take more than 4 million metric tons from Russia’s Yamal liquefied natural gas project each year when it is fully operational, said CNPC, which is an investor in the project.

In September 2013, CNPC bought a 20 percent stake in Oao Novatek’s $27 billion Yamal project for $5.4 billion.

Jiang said China and Russia have natural complementarities in energy cooperation.

“Long-term oil and gas cooperation framework has been established thorough the Sino-Russia crude oil transmission pipeline and the natural gas pipeline currently in construction,” Jiang said.

“The project also promotes the construction of the Northeast Passage in the Arctic Ocean, a sea route directly linking China and Europe.”

As many as 54 freight vessels have traveled through the passage. Once the project is expanded, there will be more LNG transported through the sea route, which will significantly lower freight costs between China and Europe, he said.

Many Chinese shipyards have participated in the project, which have accumulated technology and experience in oil and gas exploration in the Arctic region.

Russia’s Yamal liquefied natural gas project loaded its first export cargo of 173,000 cubic meters of the superchilled fuel from its Arctic terminal over the weekend.

Jiang said the Yamal project also helped Chinese enterprises in the manufacturing sector gain experience and technology to work in Arctic region.

Chinese enterprises are responsible for 85 percent of the project’s module construction. They have built seven transport ships and are in charge of the operation of 14 out of the 15 LNG carriers, according to CNPC.

The contract amount for the project’s construction totaled $7.8 billion, while the shipping contract amounted to $8.5 billion, it said.

China’s drive for cleaner energy is leading to a gas shortage this winter, with a severe shortage of natural gas as Beijing curbs coal use.

To ease the rising demand for gas, Qu Guangxue, a CNPC spokesman, said that the company plans to continue negotiating with Central Asian nations for additional stocks to ensure adequate domestic natural gas supplies.