Modelling an optimal foreign natural gas import scheme for China

Abstract

Following China's pledge to mitigate GHG emissions, natural gas has become an important choice for promoting low-carbon development in the country. China has introduced natural gas-friendly policies to increase the penetration of natural gas into its total energy consumption, causing an increase in the demand for foreign natural gas in China. This study attempts to devise a foreign natural gas import scheme for China by constructing a mathematical programming model. Various aspects of energy security, such as diversification, lower dependency, supplier export capacity, minimizing the import cost, transport distance and political instability associated with each of the foreign natural gas suppliers, were incorporated in the decision-making model for a foreign natural gas import scheme for the years 2015–2020. The proposed model optimizes China's strategy by utilizing the existing capacity of the piped natural gas (PNG) infrastructure and gradually increasing the liquefied natural gas (LNG) supply from the top six suppliers in the world, i.e. Qatar, Malaysia, Australia, Nigeria, Indonesia, Trinidad & Tobago and Algeria. Furthermore, the analysis of the existing and planned LNG and PNG import infrastructure suggests that China will have more than enough import capacity to fulfil the demand for foreign natural gas in the country until 2020.