Producers: Sinopec to Begin Production at Green Hydrogen Plant in Xinjiang
On 30 June 2023 it was reported by Reuters that China’s oil and gas producer SinoPec is now beginning the production at its first green hydrogen plant located in Xinjiang.
According to the report this green hydrogen plant could produce up to 20,000 metric tons of hydrogen per year. Reuters
Although China intends to increase its domestic use of renewable energies, such as hydrogen, for reducing carbon emissions from industrial production. Chinese producers also have the capability to export clean energy as demand for sustainable energy is steadily increasing on global markets.
Writing for the publication Areas & Producers, Yury Erofeev recently published some report findings about how the hydrogen market will be larger than the LNG market by 2030.
But he’s also been following China’s clean energy exports, like in this content piece published early in the year about how China exported about 155 GW of solar modules in 2022.
In fact, renewable energies are now part of the structural debates around ensuring energy security, especially for emerging markets.
But in my personal point of view, oil and liquified natural gas (LNG) are two of the main reasons why China is on the radar of oil and gas producers.
Please let me take your attention here so that I can explain further.
The International Energy Agency (IEA) has been warning about coal since July 2022, when they released a Coal Market Update explaining a surge in gas-to-coal switching as a result of high costs for natural gas imports. This scenario is largely an issue of China’s and India’s industrial production. As the two countries continue to compete for foreign direct investment (FDI) and export market share.
This is probably why analysts are pointing to China’s mad rush for LNG as a sign of the future dilemmas for global energy demand.
Statistics cited by Global LNG Hub show that since China has invested in its LNG infrastructure, that the amount of imports have increased from 50 billion cubic metres (bcm) in 2017 to 91 bcm in 2020. Following this uptrend, China became the world’s largest LNG importer by volume in 2021, only to be surpassed by Japan, formerly the world’s top importer before 2021, due to China’s covid-19 restrictions on economic recovery.
But China’s LNG push as a carbon reduction strategy is still in full swing. For example, Bloomberg reported that because 15% of new long-term LNG contracts belonged to China that it would gain significant market share over LNG import competition. Argus also highlighted how China continues to invest in LNG terminal capacity, which indicate how seriously the country is taking into consideration the future of gas imports as a main source of the country’s overall energy composition. Thus establishing the link between infrastructure investments and future industrial production.
This is a trend that is picking up some speed with the United States’ Inflation Reduction Act (IRA), not to mention China’s Belt and Road Initiative (BRI) which is all about providing for the developing world’s infrastructure needs that would supposedly facilitiate new pathways for global trade. (This is my personal interpretation of BRI; it doesen’t mean I necessarily agree with the facts or outlook.)
The biggest story for LNG in 2022 was the China-Qatar supply deal — touted as the world’s largest-ever LNG supply deal at $60 billion over a total of 27 years.
Upon the news of this landmark deal, the Carnegie Endowment for International Peace published an in-depth report about its significance to global energy dynamics and geopolitical trends. One of the key points mentioned in the report is that this deal brings China much closer to Qatar, and forms part of the country’s “multifaceted engagement strategy to expand its economic and geopoltical footprint.”
Read an outlook published in Areas & Producers about the near-term effects from Geopolitical Trends, Windfall Taxes and US-China LNG Scenarios on the world’s energy security dilemmas for emerging markets.
