Canada: China's LNG Development Strategy Enters 12th Five-Year Plan

With exports to the U.S. declining, Canada's natural gas industry is actively exploring new markets for production, including the export of liquefied natural gas (LNG) to China. This bulletin provides a brief update on China's LNG industry, and highlights the opportunity of China's LNG market for Canadian natural gas. The article includes a discussion of China's recent dedication to significantly increasing its LNG importation capacity, the location and operatorship of China's current and planned LNG import facilities, and the potential future impact of domestic shale gas development on China's LNG importation policies.


China has recently committed to a significant expansion of its natural gas use, highlighted by a series of interrelated state-mandated development plans and the construction of coastal LNG import and regasification facilities. This push toward greater LNG capacity will involve significant participation by China's state-owned oil and gas companies, including CNOOC (the China National Offshore Oil Corporation), Sinopec (China Petroleum & Chemical Corporation) and CNPC (China National Petroleum Corporation). Drivers include energy security as well as a desire to reduce dependence on coal and cut greenhouse gas emissions. In total, while current Chinese LNG import capacity stands at approximately 18.8 million tonnes or 26 billion m3 (BCM), by 2015 it is expected that China will possess LNG import capacity of more than 47 million tonnes or 64.8 BCM per year.

As a socialist market economy, China's economic development is in good part steered by state-mandated plans or guidelines mapping strategies and initiatives at both the national and regional levels. These are exemplified by "five-year plans" which each contain smaller, industry or sector-specific programs. The National Development and Reform Committee (NDRC) issued its 12th Five-Year (2011 to 2015) Plan for natural gas development (the Natural Gas Plan) to central and local governments in October 2012. Importantly, the Natural Gas Plan calls for a marked expansion of natural gas utilization at both the industrial and residential levels. This was followed by the issuance by the State Council in January 2013 of its 12th Five-Year Plan for Energy Development (the Energy Plan) establishing guidance, fundamental principles, development targets, key tasks, and measures and policies for China's energy development.

Pursuant to its Natural Gas Plan, the NDRC predicts that China's annual consumption of natural gas during the 12th Five-Year period will increase an average of 20 BCM per year to reach 230 BCM by 2015. However, the Energy Plan anticipates that annual Chinese domestic natural gas production will only increase from 94.8 BCM in 2010 to 156.5 BCM by 2015. Notably, this means that China will need to import at least 73.5 BCM of natural gas annually (or 32% of its annual consumption) by 2015 to meet domestic demand. Furthermore, the NDRC also predicts that China will import 93.5 BCM of natural gas annually or 40% of its estimated annual consumption of natural gas by 2015 in order to hedge against the risk of shortfalls in domestic production.


China has developed a strategy of importing natural gas through four main channels, being (1) the Central Asian Gas Pipeline in its northwest region which brings natural gas to China from Turkmenistan, Uzbekistan, and Kazakhstan, (2) the Sino-Russian Pipeline in its northeast region which brings natural gas to China from Russia, (3) the Sino-Myanmar Pipeline in the southwest region which brings natural gas to China from Myanmar, and (4) overseas shipments importing LNG from international markets into China.

Towards this end, the speed at which China has increased, and continues to increase, its LNG importation capacity is substantial. China only began importing overseas LNG in 2006. By the end of 2012, however, China had completed construction and commenced operation of six LNG import terminals on its eastern and southern coastlines with annual LNG receiving capacity of 18.8 million tonnes or 26 BCM. Of these six LNG import terminals, four terminals are operated by CNOOC, being (1) Dapeng LNG terminal of Guangdong province, (2) Putian LNG terminal of Fujian province, (3) Yangshan LNG terminal of Shanghai, and (4) Ningbo LNG terminal of Zhejiang province, and two terminals are operated by CNPC, namely (1) Rudong LNG terminal of Jiangsu province and (2) Dalian LNG terminal of Liaoning province.

Furthermore, China is on pace to increase its annual LNG importation capacity by an extra 28.2 million tonnes by 2015 thanks to completion of phase II of the Rudong LNG terminal as well as the construction of eight additional LNG terminals. Of these eight additional LNG terminals, three terminals will be operated by Sinopec, being (1) Tianjin LNG terminal, (2) Qindao LNG terminal of Shandong province, and (3) Beihai LNG terminal of Guangxi province, four terminals will be operated by CNOOC, namely (1) Hainan LNG terminal of Hainan province, (2) Zhuhai LNG terminal, (3) Shenzhen LNG terminal of Guangdong province, and (4) Tianjin LNG floating terminal, and one terminal, namely Caofeidian LNG terminal of Hebei province, will be operated by CNPC.


With reserves estimated at approximately 1,115 trillion cubic feet by the U.S. Energy Information Administration, in March 2012, China issued its plan for shale gas development during 2011 to 2015 (the Shale Gas Plan). The Shale Gas Plan recognized that China is falling behind North America in terms of shale gas development, and set goals for shale gas reserve assessments and the advancement of technical expertise, with a long-term goal of producing 60 to 100 BCM of shale gas by 2020. While the Shale Gas Plan may boost shale gas production in China – and as a result reduce China's demand for LNG imports from approximately 2016 and beyond – a number of challenges have given rise to a healthy skepticism regarding the economic viability of shale gas production in China without a meaningful technological breakthrough, including difficult geological formations, water scarcity, the location of shale gas reserves in highly populated areas, and a lack of key supporting infrastructure. On the other hand, should the Shale Gas Plan indeed significantly magnify shale gas production in China, a variety of different opportunities will present themselves to Canadian natural gas companies, including both producers and service providers.


The swift and significant expansion of China's LNG import infrastructure presents Canadian natural gas producers with a large new – and potentially long-term – market for their natural gas production. However, in order to position itself to satisfy this growing Chinese demand, Canada's natural gas industry must develop the requisite LNG export infrastructure and associated supply contracts in a similarly expedited manner. Given the global competition for China's LNG market and possibility of increasing Chinese domestic shale gas production, the costs of complacency could be great.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.