ASEAN looks to connect gas pipeline to China

ASEAN looks to connect gas pipeline to China

Shanghai, Dow Jones

The Association of Southeast Asian Nations (ASEAN) is looking at ways to extend its planned gas pipeline into China, where demand for natural gas is expected to boom in the coming years, said Guillermo Balce, executive director of the Asean Center for Energy.

"We're looking at the possibility of whether we can extend the pipeline from West Natuna (in the South China Sea)...to Guangzhou (in southern China)," Balce said in an interview this week.

"It is still in the early stage...The economic feasibility is still being looked at," he added.

The West Natuna gas field in Indonesia is one of the major sources of the US$7 billion Trans-Asean Gas Pipeline being set up by 10-nation group.

The project will have seven interconnections that will become operational by 2020, aiming to provide an adequate energy supply to the region.

Given the strong economic growth in southeastern China, Balce said future demand for natural gas is likely to be unfilled, despite the recent signing of two liquefied natural gas contracts between China and Australia and Indonesia.

Based on a study made by PetroChina Co., the anticipated shortage of natural gas in southeastern China, which includes the booming industrial provinces of Guangzhou and Fujian, is likely to reach as much as 16.8 billion cubic meters per year by 2020.

Demand for natural gas in China is expected to rise as local governments shift to cleaner sources of energy, such as natural gas, from coal and crude oil.

China is building a 3,890-kilometer gas pipeline from Xinjiang in the west to the markets in the east around Shanghai. A pipeline project from Russia to northeastern China is also being planned.

As of yet, there is no immediate plan to build a major pipeline in southern China.

Balce said it will take time for Asean and China to seriously consider the plan, saying that it usually takes years for such cooperation to take shape.