In recent months China has earned itself a prime spot in lots of energy headlines thanks to President Xi Jinping’s ambitious carbon curbing and clean energy goals. China is currently the world’s biggest greenhouse gas emitter by a huge margin--its emissions are almost double that of the next runner up, the United States. It’s therefore huge news and a ray of hope for all of us Earthlings that Beijing has announced that it will be reaching peak emissions in just ten years and then bringing its currently considerable carbon footprint all the way down to zero by just 2060. This is no small feat.

While this is great news for the climate and has been some truly excellent PR for China and President Xi’s administration, this development was largely unmotivated by climate concerns. China’s decision to double down on renewable energy has far more to do with energy security--one of Beijing’s primary concerns. China’s voracious appetite for energy has so far been met with huge volumes of foreign energy imports, and China is doing everything in its power to wean itself off of foreign fossil fuels and become an energy producing giant in its own right. So far that has involved making aggressive moves into largely undeveloped foreign energy markets, ramping up coal production abroad where the emissions will not be attributed to China but to the countries where China is now operating, and big inversions into nuclear energy.

Now, just this week, China has revealed the newest phase in its energy security strategy, and it involves a new state-owned and -run pipeline buying out a huge chunk of the assets owned by Kunlun Energy Co., the country's biggest pipeline company. “China’s pipeline network behemoth inked a $6.3 billion asset purchase in the latest step to bolster the nation’s energy security and break down market barriers,” World Oil reported this week.

Kunlun shares received a huge bump after the news came out that the company would be selling a whopping 60% stake in a natural gas pipeline located in beijing and an even heftier 75% stake in its liquefied natural gas subsidiary company Dalian for a 40.9 billion yuan price tag. The buyer is China’s brand new state-owned firm aptly called PipeChina, which began operations in October. Kunlun, too, is the subsidiary of a state-owned energy company. It exists under the umbrella of PetroChina Co., the majority owner of a Beijing pipeline and other key LNG transport infrastructure.

“China Oil & Gas Pipeline Network Corp. is part of an effort by President Xi Jinping’s government to consolidate the nation’s major pipelines and other midstream facilities into a single firm, intended to boost competition among drillers and downstream oil and gas sellers,” World Oil elaborated.

Even before these developments, China was on track to reach record LNG imports in the coming year. In September, Reuters reported that Chinese LNG imports were projected to grow 10%, with the nations total gas use expected to expand 4-6% this year even as the rest of the world sees its natural gas markets shrink. “China is the only major bright spot on the world gas market, where demand is set to fall by about 4% as the global economy contracts due to coronavirus lockdowns,” read the report. At this rate China will unseat Japan as the global leader of LNG imports in just two years.

While it's unlikely that China will be able to replace these imports with domestically produced energy in the short term, this latest move by President Xi to consolidate China’s pipeline infrastructure will allow his administration to bolster their control of the industry and contribute to Beijing’s long-term energy security goals.

This article is reproduced at oilprice.com