How natural gas will help make beautiful China real

Natural gas has a pivotal role to play in reducing greenhouse gas emissions. Industry leaders reviewed the issues, opportunities and challenges to be met at the LNG2019 Conference & Exhibition in Shanghai. Total, the world #2 in LNG, was there.

LNG20191, the nineteenth International Conference & Exhibition on Liquefied Natural Gas, was held in Shanghai, China, from April 2 to 5. Held every three years since 1968, the event brings together the leading global players in the LNG industry. With 11,000-plus participants, 240 speakers and 550 organizations from more than 80 countries, the four-day gathering was an opportunity to review the challenges, opportunities and outlook for the global gas industry.

LNG2019 Looks at the Challenges Facing LNG

In 20 years' time, China will account for 25% of global LNG consumption

The choice of host city speaks volumes. China is experiencing spectacular growth in natural gas consumption. Demand leapt 18.1% in 2018 alone, to 280.3 billion cubic meters, according to the country's National Development and Reform Commission. That growth is being led by China's commitment to reduce its greenhouse gas emissions — which make up 30% of the global total — under the 13th Five-Year Plan (2016-2020), sometimes referred to as Beautiful China. Ten of the plan's 13 main objectives relate to the environment.

Using natural gas, which emits half as much carbon as coal, in industrial, residential and transportation applications is an effective solution. So, LNG consumption is forecast to increase to around 10% of the Chinese energy mix by 2020, 15% by 2030 and 20% by 2040. This spectacular growth will eventually add up to 25% of global demand.

• For more on the subject: Energy needs and climate challenges: Gas on the march

5% Annual Growth for China

For Total, LNG2019 was an event not to be missed. Present in China for more than 35 years, Total became the world #2 in LNG when it acquired Engie's upstream LNG assets in 2018, and expects to have a 10% share of the global market in 2020 (40 million tons). The company is actively seeking to carve out a spot for itself in the world's most buoyant gas market, one that will see projected average annual growth of 5% a year in the coming decades. "It is absolutely important for us to meet clients, so that people see us, as well as maybe discover the new Total with a bigger portfolio," commented Laurent Vivier, Senior Vice President, Gas at Total.

And Total is walking the talk with the signature with of a major sale and purchase agreement to supply Guanghui with 0.7 million tons of liquefied natural gas a year for 10 years. "Guanghui is an increasingly successful LNG market player in China with clear ambitions for growth. This new supply contract is in line with Total's strategy to expand its presence in the Chinese LNG market, which saw imports soar by 41% in 2018 and will continue to be a key driver of LNG market growth in the future," pointed out Laurent Vivier.

The Chinese government continues to open up the market. "In recent years, five private gas terminals have been commissioned and several others are currently under construction or planned," comments William Zhao, Total China Country Chair. "They will help to diversify China's LNG supply, which will in turn fuel competition."

• For more on the subject: Innovation: Using less energy to liquefy natural gas

A place for renewables too

The Middle Kingdom's energy landscape is changing, and Total's activities in China are not restricted to natural gas. In this country with 1.4 billion inhabitants, "The company's growth parallels the changes in the Chinese market," emphasizes William Zhao. All of Total's businesses are represented there — including renewable energies — and affiliate Saft, which designs, manufactures and markets high-tech cells and batteries for industrial applications, is particularly present. It has a production unit in Zhuhai in southeastern China.

And that explains why LNG2019 saw the signature of an agreement with Tianneng Energy Technology, a subsidiary of privately owned Chinese company Tianneng, to set up a joint venture to expand both companies' lithium-ion battery business. Manufacturing will be based at the Changxing Gigafactory, which has a potential capacity of 5.5 GWh, of which several GWh are already in operation. "Energy storage is a key issue. China is the world's leading market for renewable energies, and efficient stor-age solutions are needed to manage their intermittent nature," states William Zhao.

• For more on the subject: Delivering on all of gas's promises

More challenges to meet

China still faces many challenges before it can leave carbon-based energy behind. The main hurdle is the cost of natural gas compared to coal and oil. As Patrick Pouyanné, chairman and CEO of Total, said at the New LNG Markets plenary session on April 2, "Natural gas still costs more to produce than coal and oil, and consumers want the cheapest energy possible." Through heavyweights such as Total, the gas industry must reduce costs quickly, in particular in the area of pipeline transmission and shipping on LNG carriers.

That challenge is on a par with the rich opportunities the Chinese market holds out.

For more on the subject: Is natural gas really nothing more than a transition energy?

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1 LNG: Liquefied Natural Gas

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