Liquefied Natural Gas in China Options for Markets, Institutions, and Finance

'Aware of the increased demand for energy, the Chinese government is striving to develop a comprehensive strategy to ensure that continued economic growth is sustained by sufficient energy supplies. Energy and environmental security are driving forces of national energy policy.' In an effort to meet the continuing demand of the power sector and ensure stability of fuel supply sources, the State Power Corporation asked for World Bank assistance to assess the viability of imported liquefied natural gas (LNG) as a fuel source for coastal provinces. In response to their request, the Bank undertook a detailed economic assessment of LNG as an alternative fuel source, and reviewed the steps necessary to support its introduction. This report is a result of that study. The report provides a general overview of energy demand in East China and the potential market for gas. It also assesses the fuel and gas supply options and reviews key factors for the successful introduction of LNG, including institutional, regulatory and financing issues. This report will be of interest to external banks, private companies, Chinese organizations, and Bank staff.