Giant natural gas reserves in China could undermine Gazprom’s plans

Faced with the systemic opposition that the United States and its “avatars” in the EU have to Russian pipeline projects in the European gas market, Gazprom is forced to look for alternative markets in Asia. The most natural seems to be an attempt to gain a foothold in the PRC, with which our country “seems to be friends”, and the United States “is at war”. But, alas, not everything is as simple as we would like. In the Chinese market, Russian gas may collide with Chinese gas.




Celestial, this locomotive of the world economics, consumes more and more oil and gas from year to year. It produces some of the gas itself, imports the rest from Turkmenistan, and actively purchases LNG from various suppliers. Gazprom analysts estimate that in the near future, the consumption of “blue fuel” by China alone will be equal to the united Europe, amounting to 750-780 billion cubic meters per year.

The domestic monopolist plans to enter this promising market through the construction of gas pipelines from Siberia. A plus to these projects is the fact that there are no problems with transit countries, as is happening in the European direction, where it is so easy to insert sticks into the wheels. Unfortunately, this is where the positive ends.

At first, the Chinese authorities estimate their growth in gas consumption is much more modest than the specialists of Gazprom. In 2017, the gas industry development plan for the next 20 years was published, which indeed envisages an increase in consumption by an impressive 76%. But in numbers this will amount to “only” 347 billion cubic meters, that is, almost half as much as Gazprom’s analysts drew.

Secondly, it is very likely that Beijing, in the very foreseeable future, will be able to provide its own domestic increased consumption of “blue fuel”. The fact is that China itself is the owner of the richest shale gas reserves in the world, which exceed the assets of both the USA and Australia combined. About 1,06 trillion cubic meters of shale gas are concentrated at the depth of the Sichuan depression. Geological exploration with enviable regularity is increasingly increasing Chinese oil and gas reserves.

There is one “but.” Shale production in the Sichuan basin began in 2016 with the help of BP, however, it remains very modest. The reason is extremely difficult geological conditions. Minerals are located at a very great depth, over 3,5 thousand meters below sea level. Standard technology hydraulic fracturing does not work there. In addition, there are problems with the densely populated Sichuan province, which, however, can be solved if desired.

They don’t intend to sit like hounds on such wealth in Beijing. Developments in the field of oil shale mining technologies under extreme conditions have long been underway. For example, the technology of the so-called “energy core” was developed at Xi'an Transport University. The generated powerful electric current will have to create a shock wave similar to hydraulic fracturing and can be used at extreme depths. Sichuan University professor Chen Rong voices China's ambitions:

A technological breakthrough could trigger a new “shale revolution”.


If this or that method works, the energy market in Asia, and with it the whole world, will completely change. Financial analyst Artem Deev comments on the possible situation:

Today, China - one of the largest consumers of gas - has a chance to diversify its gas imports and create price competition between sellers to the detriment of them, but in favor of consumers.


In aggregate, what has been said means that Russia has long had time to accelerate from the "pipe economy" to a production, high-tech one. Otherwise, in the medium term, you can naturally remain at a trough with half empty expensive pipelines.
Photos used: https://www.aboutenergy.com/
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  1. Sergey Latyshev (Serge) 3 October 2019 11: 39
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    China has long announced that it has begun to produce its own shale gas and from the bottom. So far, a little.

    So our oligarchs can fly by. It’s good that pensioners and hard workers are at hand — you can take them ...
    1. Hwam Offline
      Hwam (Anton) 4 October 2019 12: 39
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      But hard workers and retirees are also not eternal dairy cows.
      1. Sergey Latyshev (Serge) 7 October 2019 09: 00
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        Alas, almost eternal ....
        With the rise in price of gasoline, for example, everyone heroically fights every month .... and then Forbes prints new records.
  2. Dzafdet Offline
    Dzafdet (Sergei) 3 October 2019 11: 44
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    Let them get it. Earthquakes and Khan to China will begin ...
  3. Pishenkov Offline
    Pishenkov (Alexey) 3 October 2019 11: 46
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    The Chinese in this sense are extremely pragmatic. Even more pragmatic than the Americans. Judging by what has been said, at least at present and in the coming years, the development of Chinese reserves is significantly more expensive than purchases in the Russian Federation. Therefore, they are unlikely to immediately rush to their own, even if they find an effective way of mining. My assumption is that they will be scouted, prepared for the start of production, and frozen, just as the United States once used its oil, as a strategic reserve. Indeed, China also periodically had difficult relations with Russia, and there is no guarantee that this will not happen in the future.
    1. Nick Offline
      Nick (Nikolai) 4 October 2019 20: 57
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      Quote: Pyshenkov
      Judging by what has been said, at least at present and in the coming years, the development of Chinese reserves is significantly more expensive than purchases in the Russian Federation.

      Here! For some reason, the author did not bother with the problem of the price of shale gas. Either he is not an economist, or he is consciously silent. I would add to this that for the next 30 years, the volume of gas supplies has already been agreed, otherwise no one would have started to pull pipes. So do not fly.
      1. Victor Peter Offline
        Victor Peter (victor petrov) 5 October 2019 18: 14
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        Exactly! Most scammers such articles have the status of analysts.
        1. Nick Offline
          Nick (Nikolai) 10 October 2019 11: 10
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          Quote: victor peter
          Exactly! Most scammers such articles have the status of analysts.

          I would give them the status of Analitegs.
      2. Pishenkov Offline
        Pishenkov (Alexey) 7 October 2019 13: 19
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        I agree. Do not fly. The Chinese have long known about this gas for a long time, but so far it’s clearly not commercially interesting to them for production ... Otherwise, as you say, they wouldn’t pull the pipe ...
  4. Bulanov Offline
    Bulanov (Vladimir) 3 October 2019 11: 56
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    Large reserves of gold were also found near Ukraine, only they lie very deep ...
    1. AICO Offline
      AICO (Vyacheslav) 3 October 2019 13: 42
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      Yeah - if you dig through it, then just in Manhattan Bank - I myself am surprised at how correctly calculated - probably, Sumerian mathematics helped!
      1. boriz Offline
        boriz (boriz) 3 October 2019 20: 10
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        Something tells me that the descendants of the Sumerians, even having got to the bottom of Fort Knox, will find gilded tungsten instead of gold.
        1. Nick Offline
          Nick (Nikolai) 4 October 2019 20: 59
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          Quote: boriz
          Something tells me that the descendants of the Sumerians, even having got to the bottom of Fort Knox, will find gilded tungsten instead of gold.

          Yes, the main thing for them is to shine. lol
    2. SERGEY SERGEEVICS 3 October 2019 14: 34
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      Quote: Bulanov
      Large reserves of gold were also found near Ukraine, only they lie very deep ...

      China, unlike them, will be able to get it and process it, and they have the technology for this.
    3. Victor Peter Offline
      Victor Peter (victor petrov) 5 October 2019 18: 15
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      No problem! Ukraine dug up the Black Sea and digs gold ...
  5. Rinat Offline
    Rinat (Rinat) 3 October 2019 12: 33
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    Shale gas production is significantly more expensive than conventional gas production. In any case, for now. Perhaps someone will develop a method for its extraction is somewhat cheaper than the existing one, but by definition it will be more expensive. Therefore, in the next decade, the Chinese will be more profitable to buy gas abroad. At the same time, Russia can not calm down, but purposefully invest in the development of the most self-sufficient economy, as it was in the USSR in the 30s and 60s.
  6. Artie Offline
    Artie (Artyom Korolev) 3 October 2019 18: 33
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    In fact, there was signed a contract for the supply of gas for 30 years at 38 billion cubic meters per year. China, even if it drowns in gas, can no longer refuse.
  7. Marzhecki Offline
    Marzhecki (Sergei) 4 October 2019 08: 10
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    Quote: Artie
    In fact, there was signed a contract for the supply of gas for 30 years at 38 billion cubic meters per year. China, even if it drowns in gas, can no longer refuse.

    So I want to say that the Chinese are "tough", right?
    1. Nick Offline
      Nick (Nikolai) 4 October 2019 21: 04
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      Quote: Marzhetsky
      So I want to say that the Chinese are "tough", right?

      Hardly dumb. Because for violation of contracts stipulated penalties. Both parties are insured just in case. There is a rule with Ukraine - either take it or pay it. Something similar, for sure, is in the agreements with China.
  8. Screw Offline
    Screw (Gennady) 4 October 2019 08: 21
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    Bluff. The goal is to impose our conditions on our monopole. In Sichuan, it often shakes.