China is betting heavily on African floating LNG projects and is planning a mammoth investment of $7 billion in a strategic push to corner the market for itself.
The move is considered very risky as China will be taking a gamble on a “largely untested technology in the hope that energy markets will recover by the time they start production in the early 2020s,” a report by Reuters argued.
Western investment firms and international banks have expressed their concerns, owing to the unattractive state of commercial shipping and the poorly-structured gas markets across Africa.
But China is undeterred, largely due to its desperate need for gas. The Asian giant sees gas an alternative to environmentally-degrading coal power and believes gas as the solution to cleaner air for its cities.
China also foresees that the untapped gas market in Africa presents an opportunity for cheaper gas. Reuters reported that China, the world’s second-largest economy, is “making a strategic push into FLNG, aiming to become the lowest cost seller of the complex floating plants and lead the global rollout of a technique that remains in its infancy, with only one project in commercial production so far.”
China has so far wasted little time in putting its finances where it sees promise. It has lent almost $4 billion to three FLNG projects situated off the African coast. According to Reuters, “In two more African projects costing a total of $3 billion, it plans not only to provide the funding but also build the production platforms.”
“We see a real commitment to FLNG in China both from the construction side and from the LNG consumption side where decreasing costs mean potentially lower cost LNG,” said Steve Lowden, chairman of Jersey-based NewAge which is planning FLNG projects off the Congo Republic and Cameroon.
China reportedly leads the global market for solar panels and is considered a significant exporter of coal-fired power plants.