CNOOC pins hopes on LNG

A CNOOC worker sets up scaffolding at a construction site near Qingdao, Shandong province. [Photo/China Daily]

Firm aims to make natural gas a future pillar industry as nation seeks cleaner energy sources

China's top offshore oil producer is eyeing liquefied natural gas as another pillar industry after oil.

"Liquefied natural gas will become another important pillar industry for the company, as new energy is playing an increasingly significant part in the national and the global energy industry," said Jin Xiaojian, general manager of strategy and planning at the State-owned China National Offshore Oil Corp.

According to Jin, gas production accounts for 18 percent of the company's total, with oil accounting for the remaining 82 percent. However, the gas production proportion will see a gradual rise to around 20 percent in the near future, as large producers worldwide are ramping up production.

"The company has become the nation's biggest LNG trader and the world's third-largest, and has imported liquefied natural gas from around 20 countries worldwide, including Australia, Indonesia and Qatar."

According to CNOOC, the company's natural gas business currently covers 78 cities nationwide, with LNG sales reaching 12.66 billion cubic meters in the first half of 2016, a year-on-year increase of 11.7 percent.

The firm's LNG imports soared to 7.675 million metric tons, an increase of 24.4 percent year-on-year.

The LNG imported by CNOOC accounts for 69 percent of the country's total, it said.

Long used in the power industry for residential heating, natural gas is a clean energy extracted from the ground and shipped through pipelines. Energy companies worldwide have started shipping the cheaper and greener form of energy between countries in recent decades.

According to a report by Ernst & Young, global demand for LNG is predicted to nearly double between 2012 and 2030.

Current demand for liquefied gas is coming mainly from industrialized Asia, with Japan and South Korea accounting for more than half of global demand.

China's interest in natural gas is particularly increasing because of efforts by the authorities to move its energy supply away from an overwhelming reliance on coal, it said.

Being the world's largest energy consumer, China seeks to raise the share of less-polluting natural gas to 10 percent of its energy mix by 2020 from 6 percent last year.

China's gas consumption in 2015 expanded by 3.7 percent to 191 billion cubic meters, according to an annual report from China National Petroleum Corp's Research Institute of Economics and Technology, while gas demand growth this year might accelerate to about 6 percent.

According to Jin, to further boost the use of liquefied natural gas from an overwhelming reliance on coal, the government should encourage gas operators to further share their pipelines and network, while making the gas price market-oriented.