Bob Dudley, CEO of BP Group.
BEIJING, Apr. 1 (Xinhua) -- China is a key driving force behind the global energy market, and its demand for natural gas is expected to grow substantially over the coming years, said BP Group CEO Bob Dudley in an exclusive interview with Xinhua before the opening of the 19th International Conference & Exhibition on Liquefied Natural Gas (LNG2019).
LNG2019 will open in Shanghai on April 2 and last to April 5. Bob Dudley is a speaker at the plenary forum “A Sustainable Fuel for a Sustainable Future” to be held on April 3.
High expectations for China’s demand
Aside from the sizeable increases in China’s domestic production of natural gas and associated new pipelines construction, LNG is an increasingly important source of energy in the country, according to Dudley.
In 2018, China saw some new major LNG projects such as Sinopec’s Tianjin LNG terminal, CNOOC’s Diefu LNG terminal, ENN’s Zhoushan LNG terminal begin operating, with a total capacity of more than 10 million tonnes per year.
With natural gas infrastructure improving, China’s LNG imports maintained robust rises in recent two years, and posted growth of 48 percent and 41 percent year on year, respectively, in 2017 and 2018.
“As China rises to help meet the dual challenge - rising energy demand and reducing emissions, we expect its natural gas demand to continue to grow, “Dudley added.
In China, BP has been working with CNOOC for almost 15 years on an LNG terminal and trunkline project in Shenzhen. It’s the first of its kind in the country and will help meet China’s rising demand for natural gas and LNG.
Dynamics of global gas market changing fast
Gas is going to play a vital role in global energy transformation since it is abundant and affordable, has around half the emissions of coal and is a flexible partner for renewables, enabling us to bring emissions down at scale when replacing coal in power generation, according to Dudley.
“Like in all areas of the energy industry, the dynamics of the global natural gas market are changing fast,” he said.
BP’s Energy Outlook suggests that global gas demand could rise by 50 percent over the next two decades, with demand being driven by rapidly expanding Asian economies.
“On the supply side, the shale revolution that’s underway has seen the emergence of US as a key player in global gas markets. Its LNG exports could almost double by 2040, supporting the development of a more competitive gas market,” introduced Dudley.
On the demand side, China is a great example of the changes taking place in the natural gas market. Its gas consumption grew 15 percent in 2017, contributing to 32 percent of global gas consumption net growth, and LNG imports have risen by almost 50 percent year on year in 2017. At the same time, China is rapidly developing its domestic industry, with production rising by 8.5 percent in 2017, to almost 150 billion cubic meters (bcm).
Rapid LNG trade leading to globally-integrated gas market
The LNG market has developed rapidly over the last few years, with that momentum set to continue. It responds quickly to price signals from different regions, allowing rapid destination switching which can help balance supply and demand.
“We have seen greater transparency with pricing mechanisms, particularly in Asia, which drives increased market efficiency for producers and consumers. BP is participating in all aspects of this development,” said Dudley.
BP’s latest Energy Outlook suggests that LNG volumes could expand substantially over the next 20 years, leading to a more competitive, globally-integrated gas market. In fact, LNG trade could double to almost 900bcm in 2040, up from around 400bcm in 2017, according to the report.
“As a global energy provider, we want to be able to provide energy to the places where it is needed. LNG really helps make that a reality,” noted Dudley.
Dudley said that BP is able to support the development of this market through its large and diversified LNG portfolio, and stands ready to work with customers to develop their markets. For example, BP is working with Siemens and Prumo in Acu in Brazil to build the largest gas-fired power plant and a LNG import terminal in South America.
When talking about the LNG2019, Dudley said that as the world’s largest dedicated LNG event, it is an important opportunity to examine how the industry is changing.
This triennial event was first held in 1968. This year marks the first time the conference to be held in China, the world’s fastest growing LNG market. LNG 2019 is presented by the International Gas Union (IGU), Gas Technology Institute (GTI) and the International Institute of Refrigeration (IIR). The Shanghai conference, the largest LNG event ever held in China, is hosted by China LNG Association, China Gas Society, Chinese Association of Refrigeration and China Gas Association. An estimate of over 170 enterprises and 1,800 representatives from 53 countries and regions will attend the conference. (Contributed by Liu Xiaoyun, He Fenglun)