The KPMG report, ‘Energy Outlook for China’ looks at the energy challenges that China faces aover the next two decades and the opportunities this provides the Australian oil and gas industry.
“China is now the second largest consumer of power in the world and relies heavily on coal,” says KPMG’s Head of China Business Practice in Australia, Duncan Calder.
"It is looking to alternative energy sources to feed the insatiable appetite for power, driven by its modernisation program and the growing middle class.
“LNG is high on the list of alternatives with LNG terminals being developed in Guangdong, Fujian, Zheijiang, and eight more planned for construction.”
KPMG adviser and former Premier of Western Australia, Richard Court commented on the paper and its relevance for the Australian oil and gas industry.
“There has been a massive growth in investment in the development of new and proposed LNG projects in areas such as Russia, Middle East, Africa and Malaysia," Court said.
"A number of new receivable terminals are also under consideration or planned in all the major markets of USA, Europe and Asia. The significant increase in new capacity is narrowing the new market opportunities for the next generation of Australian LNG projects," he said.
“Australia is in a strong position to capitalise on the significant growing LNG requirements of countries such as China but we should not sit back waiting for the next major LNG contract. Australia needs to quickly develop its gas reserves or it may risk losing opportunities in what is becoming a highly internationally competitive market.”
The KPMG report also looks at China’s natural gas and oil reserves and the challenge to bridge the gap between consumption and supply.
“China’s natural gas reserves amount to about 1% of known world reserves. It represents 2.3% of energy consumption in China and the government plans to raise this to 7% by 2020 creating a large gap between demand and supply,” said KPMG Australian Oil and Gas Centre of Excellence head Brent Steedman.
“Even with a focus on developing domestic gas reserves, China will need to continue to look internationally to meet its energy needs and to diversify its supply to manage geo-political change.
“There is also growing concern over China’s long-term oil reserves as the consumption of oil increases. China now imports 45% of its oil and 60% of those imports come from Middle Eastern countries, notably Iran and Saudi Arabia. To diversify this dependence, China has actively sought trade opportunities in Africa and Central Asia as well as Russia.
“The energy needs of the Chinese people are now a major factor in the complex global energy supply and demand equation, and Australia is in a strong position to benefit from it,” he said.
