World non-renewable energy discussion

tphuang said:

Interesting comparison between china and Europe when it comes to securing lng deals. Looks like Europe will continue to see sky high gas prices for a while. It does make me wonder if china at some point will do a major gas power station replacement of coal power. Only about 5% of their energy needs is met by natural gas. Most of their ng use are for other stuff. It's a good middle step between coal and nuclear.

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Surprised to see natural gas power generation is this low. China is adding a huge amount of wind power generation capacity but the thing about wind power is it's intermittent nature. You could be generating near max capacity of power down to zero in a matter of hours. In which case you'll want something fast acting like natural gas turbines to catch the load changes. Added bonus if they build combined heat and power plants where the combusted hot gas can be used to produce steam for heating buildings.

China has invested a lot in Hydro power which can also catch load changes quickly, but then there's also drought situations like in Sichuan last summer that'll get more common and threatening major rivers as climate change intensifies. Although it is a fossil fuel and the potential of leaking methane is bad for the environment, I think increasing natural gas power generation just seems like a no-brainer.

I guess maybe one thing holding back the development of natural gas power generation is China imports vast amounts of natural gas, which would go against the trend of energy independence. Hopefully China discovers more shale gas reserves like the one in Sichuan last year.

Chilled_k6 said:

Surprised to see natural gas power generation is this low. China is adding a huge amount of wind power generation capacity but the thing about wind power is it's intermittent nature. You could be generating near max capacity of power down to zero in a matter of hours. In which case you'll want something fast acting like natural gas turbines to catch the load changes. Added bonus if they build combined heat and power plants where the combusted hot gas can be used to produce steam for heating buildings.

China has invested a lot in Hydro power which can also catch load changes quickly, but then there's also drought situations like in Sichuan last summer that'll get more common and threatening major rivers as climate change intensifies. Although it is a fossil fuel and the potential of leaking methane is bad for the environment, I think increasing natural gas power generation just seems like a no-brainer.

I guess maybe one thing holding back the development of natural gas power generation is China imports vast amounts of natural gas, which would go against the trend of energy independence. Hopefully China discovers more shale gas reserves like the one in Sichuan last year.

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They actually have been able to raised their NG production in the recent years. I'm too lazy to look this up now, but they produce at least 2/3 of the natural gas they use. They have a lot of shale reserve, but it's harder to drill into them than the American ones, so might need a few more years.

China continuing to expand its LNG infrastructure. Not only in terms of signing long term contract, but also more facilities to handle natural gas and LNG. Still not obvious to me how much of that is going for power generation. At the moment, good chunk of their natural gas is used for industry and chemical reasons.

Looks like gasoline export in Feb will be down and same with jetfuel, but diesel will be up. That would indicate economy is going.

This will bring the combined February exports of diesel, gasoline and jet fuel to between 3.9 million and 4.15 million tonnes, about stable with January, according to the range of estimates from the consultancies.

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This week, Energy Aspects Ltd.

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that China’s daily oil imports from Russia could increase by as much as 500,000 barrels this year to about 2.2 million barrels.

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China is really ramping up import of the cheap Russian oil. Russia will likely be the largest exporter of oil to China. It's not just the small independent refineries that are purchasing Russian oil, but also the major SOEs now.

Also, article about that here. It certainly makes sense there to be this price war for China market between Saudis and Russia. China will still likely to import a lot of Saudi oil based on the long term contracts. But this will pressure Saudis even more to sell oil to China in RMB.

Where is China’s Natural gas usage at?
According to here
38% used by Urban gas (is this for heating mostly) -> covers 450 million people (so still room for growth)
37-38% for industrial fuel (industrial usage is pretty high)
16% electricity generation
9% for chemicals

In America, 37% of gas consumption is electricity
33% industrial
15% residential
11% commercial
4% transportation.

So, it seems like residential usage in China is excessively high vs America. Ideally, they can raise their electricity generation here. On the other hand, it seems like the % of people with access to NG in China has doubled in past 10 years and that’s likely to have been useful in transitioning off coal and oil product in the cities so that’s a good thing too. Generally speaking, more NG replacing coal and oil is a good thing for the medium term.

This chart shows capacity expanding from 83.75 GW in 2018 to 108 GW by 2021
Yearly capacity increase was up to 10.57 GW by 2021
Electricity generation grew to 272.TWh by 2021
Given that China’s overall electricity generation in 2022 was 8400 TWh, natural gas % is still quite small.

For look into the future
Capacity is like to go from 108 GW in 2021 to 150 GW by end of 2025 and 180 GW by 2027, so about 12 GW per year over 6 years. That is still quite puny compared to Coal. So again, it seems to me the most important affect of more natural gas is replacing coal and oil in heating and other urban usage. And the continued growth of industrial usage and maybe hydrogen fuel technology development.

China has become the de facto regulator of global oil markets.

Continued mass crude purchases by China from Unipec and other.
And more importantly, the cheap crude comes at a time when China's demand goes up and the refineries really need the additional crude import to fuel the domestic economy.

Both PetroChina and Unipec are allowed to buy only Russian crude delivered to China from trading companies that handle payments to Russian producers, arrange for shipping and insurance, sources familiar with the matter said.
None of the companies is breaching sanctions, the sources said. Neither are they using western ships or insurance permitted in the Russian price cap mechanism devised by the Group of Seven nations, the European Union, and Australia aimed at curbing Russia from funding its war in Ukraine, they added.
Under the mechanism, companies involved in the deals have to show U.S. officials documents proving that the price of Russian crude is below $60 a barrel. By going through middlemen, it shields Chinese majors from U.S. scrutiny of their trades, the sources said.

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It's very important to not be at the other end of secondary sanctions.

of course, the independent refiners don't really mind this as much and have ramped up purchases.

Chinese independent refineries' total Russian feedstock imports, including 140,000 mt of fuel oil, have jumped 39.6% from December to a fresh record of 4.38 million mt in January, data compiled by S&P Global showed.

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the volume of high sulphur fuel oil imported into China more than tripled as independent refineries snatched up cheaper negotiated barrels from Russia,

China has imported about 2.3 million mt HSFO over December-January, about 235% higher compared to 687,000 mt during November-December, according to Kpler shipping data.
“Chinese private refiners could be using bargained Russian fuel oil as an alternative refinery feedstock.”
“Chinese private refiners could show a continued appetite as long as there is sufficient price incentive.
This can also allow them bypass crude import quota limitations,” Zhang added

“China has been picking up quite a bit of Russian straight run fuel oil as feeds for its teapot refineries [ independent refineries] in recent weeks,” a Singapore-based fuel oil trader said

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More interesting news on refinery world.

Commerce ministry gathering info on how much the private teapot refineries are actually buying from Russia and how much money they are making.

Shouldn't surprise people here but China took the crown with the world's most refinery capacity, although a lot of it was unused last year due to lower domestic demand. Still crazy to me they did not try to export more refined products last year.
With Western refineries continuing to shut down, this is a great opportunity.

The private refiners with quota is definitely exporting this around the world. In this case, Jet fuel demand is going up and there is not enough supply on the market right now.

I'm still surprised that they keep just talking about domestic demand here when it's a lot about refinery capacity and how much they want to export. no question crude oil imports will be up to make use of all that new capacity coming online. They are not just going to sit idle.

Another thing I thought they would do is to also just import cheaper Russian refined products and then exporting its own refined products and make the spread.

China’s imports of Russian fuel oil are expected to hit a record high in February, with commodity analysts Kpler tracking arrivals of 5.62 million barrels, up from 3.89 million in December, which was the previous all-time high.

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Anything involving Russians can be done in RMB. This is great

Again, refinery industry is a heavily polluting one. Not that great idea to promote its use

Firms based in China account for roughly 15% of all contracts that’ll begin delivering LNG supply through 2027

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The country is estimated to have resold at least 5.5 million tons of LNG last year, according to ENN Energy’s monthly research report in January. That’s equivalent to roughly 6% of total spot market volume, making the country an enormous swing supplier.

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China should be getting a lot more natural gas through pipeline from Russia. This guarantees that China has its share of energy for domestic needs and can flip them when needed.

so looks like they are now buying more than ever from Russia with 1.52 million bpd of crude and another 142k bpd of fuel oil. Both are likely to benefit the Shandong refineries.

and as a result of that, they've been able to boost exports.

China is expected to export about 2.4 million tonnes of diesel in February, equivalent to about 643,000 barrels per day (bpd), according to data compiled by Refinitiv Oil Research.

This would be up from January shipments of around 1.78 million tonnes and 2.32 million in December.

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more diesel exports as discussed previously than gasoline and jet fuel