Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) expect strong growth in demand for liquefied natural gas in China, even if Russia succeeds in adding another pipeline, company executives said Tuesday at the Gastech conference in Milan, Bloomberg reported.
China’s new deal with Russia to move ahead with another major gas pipeline project was widely viewed as reshaping global gas flows in the 2030s, and while most analysts foresee a decline in China’s demand for LNG if Russia’s plans materialize, the U.S. majors remain upbeat.
China still has a long way to go to switch from coal to cleaner fuels such as natural gas in power generation and industry, Exxon (NYSE:XOM) Senior VP Peter Clarke said, and China will seek a diverse mix of suppliers to avoid over-reliance on Russian gas, according to Chevron’s (NYSE:CVX) president for global gas Freeman Shaheen.
“Actually as you bring more pipeline gas into China, potentially, you just see a demand response because there’s so much market there that is not connected [and] can’t be supplied today,” Exxon’s (XOM) Clarke told Bloomberg in an interview. “And as you bring supply in, you actually create new demand.”
More supply is expected to lead to lower prices, potentially making LNG more acceptable to price-sensitive markets from China and across Asia, “so ultimately we still remain very positive on China growth over the long term… then, of course, we see that developing Asia will follow in China’s footsteps,” Clarke said.
“The Chinese are very intelligent,” Chevron’s (CVX) Shaheen told Bloomberg. “So while they are doing some deals with Russia… I think you’ll continue to see a diversity of supply into China. And it just makes a lot of sense because you don’t want what happened to Europe to happen in other places.”