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China gas crunch grows

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Reuters are reporting that China oil and gas major CNOOC has rented a convoy of 100 trucks to ship LNG the length of the country to wintry northern regions in the latest unusual, and costly, move to ease a deepening fuel crisis.

The trucks, kitted out to transport 20 t apiece of super-chilled gas, are travelling thousands of kilometres from CNOOC’s main LNG receiving terminals in the south, such as the Zhuhai Jinwan and Yuedong stations in Guangdong province.

Trucking LNG to industrial customers has taken off this year as China’s gas sector booms. But distances are typically much shorter, highlighting the extreme steps suppliers are having to take to plug shortages in the north, where Beijing’s efforts to convert homes to gas and electric heating from coal have fuelled surging demand.

A result of unprecedented government pressure to clean up the environment, the clamour for more gas has led to shutdowns at factories short of supply, even as residents across China’s industrial northern heartland freeze without fuel for their new heating systems.

CNOOC did not say how much the truck convoy will cost. But China’s state majors are under political pressure to deal with supply problems stemming in part from inefficient pipeline links and storage tank capacity – there are no major pipelines connecting the north with the south.

Calculations, based on the going rate of 1.05 yuan per t, per mile to transport gas by diesel truck, point to the company being willing to soak up costs potentially running into millions of dollars.

Delivering LNG by diesel trucks travelling 2400 km from Zhuhai to Baoding, a major city in the northern Hebei province struggling with gas shortages, would take about two days and cost about 50 400 yuan (US$7615) - for the 20 t per truck.

That is almost a third of the value of a 20 t cargo of LNG cargo, based on offer prices of 9000 yuan per t on 15 December.

CNOOC’s LNG has to arrive in the south because it only has one terminal in the north – in Tianjin – and CNOOC says that is already operating at full capacity.

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