Future of Shale Gas in China and its Influence on the Global Markets for Natural Gas

Abstract

The goal of this paper is to evaluate the perspectives of China to become less dependent on gas imports in future. This paper tries to forecast the future production of natural gas in China and demand for imports. The key problem is to what extent China can become the second country after the USA with shale gas revolution and whether it will be able to do that in the next 20 years. We find several obstacles preventing the scenario of China becoming net gas exporter; among them lack of conventional gas reserves and water scarcity in the location of shale gas deposits. However, there is huge uncertainty in the volume of future gas imports from China resulting not only from the uncertainty of its demand but also of supply. Results show that China's energy strategy will lead to an increase in the speed of shale gas extraction.

Keywords: China, shale gas, production, imports, future gas markets

JEL Classification: Q35, Q31, Q47, Q25, Q37, R14