This document provides an overview of China's natural gas and LNG markets. It notes that China's domestic natural gas production has grown at 14% annually, with three major production bases. China became a net importer of natural gas in 2007, importing 17 billion cubic meters in 2010. There are currently 10 LNG terminals and over 200 LNG plants in China. The document also examines LNG supply and infrastructure in northern China near the Mongolian border, finding 19 LNG plants within 660 km that could supply Mongolia via pipeline. It analyzes the levelized cost of electricity from LNG versus diesel generation in Mongolia and China.

1. Chinese LNG Market
Sept 23, 2013
By Otgontugs
Power Systems Division

2. • China’s natural gas production has a compound
average growth rate of about 14%.
• China’s natural gas reserve is estimated to have
reached 56 trillion cm;
• As of 2010, there were three major gas production
bases under CNPC. The first is Changqing field,
Ordos basin, with 21 bcm/y ; the second is Tarim
field, Tarim basin, with 18 bcm/y ; the third is
Sichuan field, Sichuan Basin, with 15 bcm/y
• Key player: CNPC/Petrochina, CNOOC, SINOPEC,
China Gas and ENN.
Natural Gas in China

3. China’s Gas Demand Projection unit : bcm/y
2005 2010 2015 2020
CNPC 2002 63.7 106.8 153.4 210.7
CNPC 2006 120.0 200.0
CNPC 2009/10 300.0
CNPC 2011 350.0
Sinopec 2006 140.0 240.0
ERI 2002 64.5 120.0 160.0 200.0
ERI 2010 200.0 300.0
ERI 2011 230-40
NEA 2010 260
Xinhua 2010 270-300
Cnooc 2002 61.0 100.0 150.0 200.0
Source : K-W Paik, Sino-Russian Oil and Gas Cooperation

4. Natural gas map of China
Pipelines
Terminals
From Central Asia
From West Siberia From East Siberia
From
Sakhalin
From Myanmar
Gas basin

5. China LNG Development Process
• Chinese imports of LNG project was officially
launched in 1995.
• Since the beginning of this century, Chinese small
and medium sized LNG plants develop rapidly.
• November 2000, China's first LNG peak shaving plant
built in Shanghai.
• November 2001, China's first commercial operated
LNG plant built in Henan Puyang.
• September 2004, LNG plant, with 1.5 Mcbm/day
capability, put into operation in Xinjiang. This was
the largest liquefaction plant.(Xinjiang Guanghui)

6. LNG Market in China
• Daily LNG production: 15,675 kcm/day
• 10 LNG terminals, 202 LNG plants (existing,
constructing and planning) in China by Apr 12,
2013.
• 19 plants in operation within 660 km range
from Mongolia.

7. China LNG drivers

8. LNG import dependency
• China became a net
importer of NG in 2007.
• Imported about 17 bcm of
natural gas in 2010.
• It is 16% of total gas
consumption in 2010.

9. LNG plants near Mongolia
Gashuun Sukhait
/ Gantsmod border
Bayannur
/ 3 plant
Dengkou
/ 3 plants
Wuhai
/ 2 plants
Yinchuan
/ 4 plants
Baotou
/ 5 plants
Ordos
/ 13 plants
Yulin
/ 2 plants
Zamiin uud
/ Erlian border
Tumed
/ 1 plant
Zhuozi
/ 1 plant
Xianghuangqi
/ 1 plant
Zhangjiakou
/ 1 plant

10. Electricity from LNG

11. LNG cost at Chinese Border
No City Distance to
Border km
Transportation
RMB/ton*km
Remark
1 Bayannuur 291 0.82-0.95 3 plants
2 Dengkou 355 0.82-0.95 1 plant
3 Baotou 370 0.82-0.95 5 plants
4 Ordos 514 0.82-0.95 4 plants
5 Yinchuan,
Ningxia
600 0.82-0.95 2 plants
6 Yulin, Shaanxi 661 0.82-0.95 3 plants
7 Xianghuangqi 261 0.82-0.95 1 plant
Number of plants within 660 km range from Mongolia 19 plants
Transport rate calculated as 0.82-0.95 RMB/ton*km

12. BayanNuur, Innermongolia
No Company Name City Dist
km
EXW
price
RMB/ton
Trans
RMB/ton
Total
RMB/ton
1 Hengtai New Energy
(1419)
Bayan
nuur
291 4475 276 4751
2 Innermongolia Huida
(1450)
Bayan
nuur
291 4650 276 4926
3 Bayannuur Huaqi (sub
Petrochina, 1450)
Bayan
nuur
291
4 Dengkou Desheng
NatGas (1450)
Deng
Kou
355 4475 337 4812
(1419) - 1419 m3/ton, gasification rate
Dist – distance to Nariin Sukhait / Gantsmod Border.
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

13. Baotou, Innermongolia
N
o
Company Name City Dist
km
EXW
price
RMB/ton
Transpor
t
RMB/ton
Total
RMB/ton
1 Baotou Huanda New
Energy (1424)
Baotou 370 4700 352 5052
2 Shiyi New Energy
(1488)
Baotou 370 4800 352 5152
3 Baotou Xinyuan (1450) Baotou 370
4 Baotou Hengtong New
Energy(1434)
Baotou 370 4800 352 5152
5 Wante (Baotou,1460) Baotou 370 4800 352 5152
(1450) - 1419 m3/ton, gasification rate
Dist – distance to Nariin Sukhait / Gantsmod Border.
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

14. Ordos, Innermongolia
N
o
Company Name City Dist
km
EXW
RMB/t
Trans
RMB/t
Total
RMB/t
1 Ordos Xingxing Energy (1450) Ordos 514 4650 488 5138
2 Juchang New Energy (1450) Ordos 514 4650 488 5138
3 Xinsheng (1488) Ordos 514 4600 488 5088
4 Shitai Natural Gas (1462) Ordos 514 4500 488 4988
(1450) - 1419 m3/ton, gasification rate
Dist – distance to Nariin Sukhait / Gantsmod Border.
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

15. Yinchuan, Ningxia
N
o
Company Name City Dist
km
EXW
price
RMB/ton
Transpor
t
RMB/ton
Total
RMB/ton
1 Ningxia Hanas (1487) Yinchuan 600 4600 570 5170
2 Ningxia Clean
Energy(1496)
Yinchuan 600 4500 570 5070
(1487) - 1419 m3/ton, gasification rate
Dist – distance to Nariin Sukhait / Gantsmod Border.
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

16. Yulin, Shaanxi
N
o
Company name City Dist
km
EXW
price
RMB/ton
Transpor
t
RMB/ton
Total
RMB/ton
1 Shaanxi Lvyuan Gas
(1460)
Yulin 661 4750 628 5378
2 Zhongyuan Green
Energy (1450)
Yulin 661 4600 628 5228
3 Jingbian Xilan (1479) Yulin 661 4800 628 5428
(1450) - 1419 m3/ton, gasification rate
Dist – distance to Nariin Sukhait / Gantsmod Border.
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

17. Xiliin Gol
N
o
Company name City Dist
km
EXW
price
RMB/ton
Transpor
t
RMB/ton
Price at
Border
RMB/ton
1 Xianghuangqi
Green Energy
(1380)
Xianghuangqi 261 5000 248 5248
(1380) - 1380 m3/ton, gasification rate
Dist – Distance to Zamiin Uud / Erlian Border
EXW price - price of Sep 14, 2013.
Trans – transport rate calculated as 0.95RMB.

18. HS code of LNG: 27111100
Chinese side
• Import tax : 20%
• Export tax : 0%
• VAT : 13%
• Customer tax : 0%
• Unit : kg
Mongolian side
• Import tax : 5%
• Export tax : 0%
• VAT : 10%

19. • USD/ton price include Mongolian Custom tax and VAT.
• Transportation fee : 0.50 USD/km*ton
• Exchange Rate : 1 USD = 6.14 RMB.
• Gasification rate : 1450 m3/ton.
LNG Cost of Southgobi site
Cost at
Gantsmod
OT TT Remark
RMB/ton USD/ton USD/ m3 USD/ton USD/m3
4800 953 0.66 1038 0.72
5000 991 0.68 1076 0.74
5200 1029 0.71 1114 0.77
Distance from
border km
100 km 270 km Gashuun-
Sukhait border

20. Cost of electricity at SouthGobi
Site Gen
type
Fuel cost
USD
Fuel Con-
sumption
Power
ekW
Cost of
USD/kW*hr
Saving Rate
%
OT Gas 0.66 /m3 319 m3/h 1106 0.190 42
0.68/m3 319 m3/h 1106 0.196 40
0.71/m3 319 m3/h 1106 0.205 37
Diesel 1.22 /L 292.1 L/h 1095 0.326
TT Gas 0.72 /m3 319 m3/h 1106 0.208 32
0.74/m3 319 m3/h 1106 0.213 30
0.77/m3 319 m3/h 1106 0.222 27
Diesel 1.14 /L 292.1L/h 1095 0.305
• Exchange Rate : 1 USD = 1638 MNT.
• Diesel cost at OT: 2000 MNT, TT: 1870MNT.
• Power calculated as 0.75% load.

21. Cost of electricity at UB:
No Cost type USD Remark
1 Cost at Chinese border 855 /ton Xianghuangqi LNG
5248RMB/ton
2 Custom tax & VAT 132.5 15.5% of cost
3 Cost include Custom tax &
VAT
987.5 /ton
4 Transportation 106.5 /ton From Zamiin Uud to
UB, 0.15USD/ton*km
5 Cost in UB 1094 /ton
6 Cost in UB 0.793 / m3 Gas rate: 1380m3/ton
USD/kW*h
7 Gas Genset 0.229 Can be CHP
8 Diesel Genset 0.285 1750 MNT/L
9 Electricity (Central Grid) 0.056-0.067 96-110 MNT/kW*h
Saving rate around 20%, for Gas vs Diesel

22. Gas Generator
• Cat 3516C Island mode
Gas engine.
• Power rating:
1475ekW
(50Hz Continuous)
• 75% load Fuel Consumption:
9.92 MJ/kW*h
0.286m3/kW*h
•

23. Diesel Generator
• Cat 3516 TA, V-16, 4-Stroke
Water-cooled Diesel.
• Power rating:
1460ekW
(50Hz Prime)
• 75% load Fuel Consumption:
292.1 L/hr
0.267 L/kW*hr
•

24. LNG Applications

25. • .
LNG Gasification Station

26. • .
LNG

27. LNG storage

28. • CNG – Compressed natural gas.
CNG Taxi in China : fuel saving rate: 50%

29. 16 LNG Public Bus in Guangdong

30. LNG truck in China
• Installed 2 pcs 450L storage banks, after fully charged
can travel about 1,000 km.

31. LNG fuel saving rate for Bus, Truck.
In UB, Mongolia
Fuel type Diesel LNG Gas #92 LNG
Fuel consumption 42.5 L 40kg 56 L 40kg
Fuel price $ 1.068 $1.094 $ 0.989 $ 1.094
Price for 100 km $ 45.39 $ 43.76 $ 55.38 $ 43.76
Saving Rate (%) $ 1.63 (3.6%) $ 11.62 (21%)
Saving for 1 year
(300 day / year, 400
km per day)
$ 1956 $ 13944
In China
Fuel price RMB 7.4 5.5 7.41 5.5
USD 1.205 0.896 1.207 0.896
Price for 100 km, RMB 314.5 220 415 220
Saving Rate RMB (%) 94.5 (30%) 195 (45%)

32. LNG conversion of Heavy Equipment (in USA)
• Caterpillar 966F II Wheel Loader
• Fuel saving over 9000 hrs: $23,400 or 17%.

33. LNG conversion of Heavy Equipment (in USA)

34. CIMC ENRIC’s First LNG Railway Tank Container in China

35. LNG Economy

36. • Spread still high in future projection.
Projected price of Oil and Natural Gas

37. World LNG Estimated October 2013 Landed Prices

38. Natural Gas Map of Russian Federation
Russia have 8 LNG terminals only:
• 1 Existing LNG terminal (Sakhalin)
• 3 projects in preparation (Vladivostok, Pechota, Yamal)
• 3 projects under consideration (Black Sea, Kamchatka, Chukotka)
• 1 project suspended (Shtokman)

39. • Traditionally major LNG buyer since the inception
of international LNG business in the 1960’s.
• The largest LNG importer in the World.
• Fukushima nuclear power accident and
consequences to energy supply sources for power
generation
• Immediate solution – fuel oil, LNG
• LNG annual import increased by 12.2% (to 79 m
tons in 2011).
• Mid-term – shifting interest to renewables and
coal but LNG is expected to remain a significant
supply source.
Nuclear accident in Japan, March 11, 2011

40. • Electricity (CHP) from LNG is economical (compared
with Diesel) in Mongolia.
• Mining company within 300 km range from border
port, have good saving on LNG.
• LNG use as vehicle fuel, have not much saving in UB.
• China is net importer of energy, Russia is net
exporter. Need to depth study for Russia.
• The Long term Sale and Purchase Agreement (LNG) .
• LNG is expected to remain a significant supply
source for the WORLD.
Conclusion

41. • 1 ton = 2204.62 pounds
• 1 kL (kLiter) = 1 cm (cubic meter)
• 1 kCal (kCalories) = 4.187 kJ = 3.968 Btu
• 1kJ (kJoules) = 0.239 kCal = 0.948 Btu
• 1Btu = 0.252 kCal = 1.055 kJ
• 1kWh = 860kCal = 3600 kJ = 3412 Btu
Unit Conversion
MMBtu ton kcm
1MMBtu 1 0.021 0.028 Million British thermal unit
1 ton (LNG) 48.6 1 1.36 1.45 kcm (Chinese LNG)
1 kcm 35.7 0.74 1 kilo cubic meter

42. Thank you