Additional Pictures....
Ralph Winnie Jr. with the Mongolian President
Monday, November 25, 2013
Pictures of Ralph Winnie, Jr. with Professor Zoya Zakubova addressing the China Association of Science and Technology
On Saturday, October 6th, 2012 Ralph Winnie, Jr. Director of Eurasia Center's China Program and Vice President of Global Business Development for the Eurasian Business Coalition was invited to address the China Association for Science and Technology at Columbia University in New York. Mr. Winnie, Jr. discussed China's New Energy Strategy and the Implications of Shale Gas!!!!!
Additional Pictures....
Additional Pictures....
Sunday, November 24, 2013
"Witnessed tear gassing in Istanbul-Taksin Sqare"
Protesters took over the square and police in riot gear sprayed tear gas. Great media coverage and pictures on internet. Our group is fine. Once in a lifetime experience!!!!
Senator Richard Lugar addressed the US-Azerbaijan Convention in Baku, Azerbaijan.
On May 28th, 2013 Senator Richard Lugar addressed the US-Azerbaijan Convention in Baku, Azerbaijan.
President Heydar Aliyev of the Republic of Azerbaijan at US-Azerbaijan Convention in Baku, Azerbaijan.
On May 28th, 2013 President Heydar Aliyev of the Republic of Azerbaijan opened the US-Azerbaijan Convention which was held in Baku, Azerbaijan.
Wednesday, November 20, 2013
Summary of Ralph Winnie, Jr.'s Publications and Speaker Appearances
Published:
Diplomatic Courier:
1. Privatization in Russia- January 19th, 2011
2. Hu Jintao's Last Speech in Washington- January 24th, 2011
3. China's Plans for a Sustainable Energy Policy- April 2011
4. French Diplomacy as it Evolves from the G8 Forward to the G20- May 2011
5. Getting to Know You: Mr. Xi Comes to Washington- February 16, 2012
6. The Dynamic Changes inn China and Russia's Military Diplomacy- March 2012
7. Obama and China: Moving Forward Together- April 2013
On January 19th, 2011, Chinese President Hu Jintao met with President Obama in Washington, D.C. The Council on Foreign Relations hosted a question and answer session to discuss the future of US-China relations. Ralph Winnie, Jr. of Diplomatic Courier asked the following question: What do you think the Chinese feel is the greatest impediment for Chinese companies that are trying to do business in the USA? What is the emerging Chinese attitude towards the United States as an investment partner?
Washington Post:
1. Closer to China- December 2009
2. Iran: Russia's Strategic Economic Client- March 24th, 2010
3. Russia's New Silicon Valley- June 23rd, 2010
4. Endless Summer- August 31, 2010
5. Joining Club WTO, Seventeen Years On- December 14, 2010
Eurasia Brief-The New Capitalist Economic Model vis-Ã -vis Iran: So Near Yet So Far
This was co-authored with Ambassador Donald Bandler and was published by both the Atlantic Council in December 2009 and shortly thereafter in Diplomatic Courier print edition.
The Case for a Separate Tax Regime for International Athletes, Tax Notes International: Volume 38, Number 1, April 4, 2005
Featured article in Nanning Daily discussing legal and tax implications of doing business in China. 2005
Federal Allies
1. Capitol Hill Update: Fiscal Cliff- January 1, 2013
2. National Defense Authorization Act Expands Mentor Protégé Beyond 8 (a) Program-
March 2013
3. Register for Washington Days Conference May 6-7th, 2013- April 1, 2013
4. Never Contract with the Enemy- May 2013
China's Energy Investment and Strategy in Shale Gas- Published in 2012 US- China Green Tech Journal produced by China Association for Science and Technology. I presented this paper at both 2011 and 2012 US-China Green Development Symposium which was held at the World Bank in 2011 and Columbia University in 2012. I was presented an award as a featured speaker at the 2012 conference at Columbia University. Go to www.cast-usa.net
Take Down Radio- April 23, 2012 and March 5, 2013:
Wrestling and International Relations: DC's Ralph Winnie, Jr. talk with Takedown Radio. What does wrestling have to do with international relations, finance and public discourse? Wrestling helps us understand, compete and relate with other countries like China and Russia.
Live Interviews with China Central Television in Washington, DC
January 21, 2011- Hu Jintao's Visit to United States
April 2012- Xi Jinping's visit to United States
May 4, 2012- Strategic and Economic Dialogue- Economic results- New Rules relating to investment in financial institutions in China. Featured on Biz Asia show
March 14 2013- US- China Trade Relations- Impact of new leadership in China
April 13, 2013- Tensions on the Korean Peninsula; Kerry's approach to Asia-Pacific issues; New Type of US-China relationship' Kerry's Asia-Pacific Strategy
May 22nd, 2013- Economic Objectives surrounding Obama and Xi meeting in California. Discussion of Joint venture deals between California and China
July 10, 2013- Obama and Xi- Discussion of US-China Strategic Economic Dialogue in Washington, D.C.
Live Interview with Caixin Media on November 14th, 2012 in New York City at New York Stock Exchange:
Discussion of Obama's economic policies; US stimulus plan; Romney's economic plan if he had been elected; China as a major issue in US Presidential election; Future of US-China Relations; Impact of China being labeled as a currency manipulator
Universal Peace Federation Symposium (Participant) and Published Report- Sponsored by the Washington Times:
June 28th, 2012- Security Cooperation in Northeast Asia: Russia's Role in Stability in Eurasia
and the Far East
July 25th 2012- Between the Army and the Muslim Brotherhood: Whither Egypt?
September 26, 2012- The Tragedy of Syria
January 30th, 2013- Bringing Long Term Peace and Prosperity to the Balkans: I MODERATED as well asbeing a participant in this panel.
May 22nd, 2013- Two States: One Country: Israel and Palestine: A Path Towards a Shared
Future
June 27th, 2013- Transnational Crime in the Americas
Attended APEC in December 2011 in Honolulu, Hawaii as media representative for Diplomatic Courier. Published article in Diplomatic Courier's APEC supplement regarding an overview of the Summit and its implications for global business development.
Speaking Engagements:
Eurasian Business Coalition's Doing Business With Russia Forum held at the Russian Trade Mission and Russian Cultural Center;
A. 2009 Moderated panel discussion regarding Russia's Special Economic Regions. SPEAKER- Economic Growth and opportunity in Tartarstan
B. 2010-SPEAKER-Russia's New Silicon Valley-Skolkovo
C. 2011- Moderated panel discussion regarding Bilateral and Multilateral Support for Doing Business with Russia
D. 2012- Moderated panel discussion regarding Diversification of the Economy-Russia's New Initiative for Scientific Innovation. Will the Energy Sector Rebound Given the New Paradigm in View of Shale Gas Development in the United States
June 8, 2011: Tunisia Uprising: Revolution, Aftershocks, and Opportunities in the Middle East and North Africa. Held at Frederick Community College and Institute for Learning in Retirement
SPEAKER: Results of G8 Summit and the Eurasia Center Business Initiatives
October 2011- US China Green Development Symposium. Held at World Bank in Washington,
D.C.
SPEAKER: China's Energy Investment and Strategy in Shale Gas
September 5, 2012-Rotary Club of Kahala-Honolulu, Hawaii
SPEAKER: Doing Business with China
Received Certificate of Appreciation
October 2012- US-China Green Development Symposium. Held at Columbia University in
Washington, D.C.
SPEAKER: China's Energy Investment and Strategy in Shale Gas
January 3, 2013- Windward Rotary- Kailua, Hawaii
SPEAKER: Doing Business with China
Received Certificate of Appreciation
March 16, 2013- Breakfast Briefing for Pennsylvania Delegation at 2013 Conservative Political
Action Conference in Maryland.
SPEAKER- Doing Business in China
April 22, 2013- US China Investment and Trade Summit. Held at the Ronald Reagan Center in
Washington, D.C.
MODERATED panel discussion- The Role of Federal, State and Local Governments in
US-China Investment and Trade
May 13, 2013- African American Business Development Network and Policy Association.
Held at Comcast office located in Washington, D.C.
SPEAKER: Doing Business in China
July 25, 2013- Education Association for China Tomorrow. Held in Rockville, Maryland
SPEAKER: Political and Economic Challenges confronting US-China relations.
Professional Organizations:
Eurasia Center: Board Member
Federal Allies Institute: Board Member, Director of Government Relations, Legal Counsel
Foundation For Islands of Harmony- Board Member
Mongolia Society: Legal Advisor
National Kidney Foundation: Member, Public Policy Committee 2005- 2011
National Press Club: Member, International Correspondents Committee
Rotary- Member
US Asian Cultural Academy- Vice President
USA Wrestling Foundation- Board Secretary
Zorig Foundation- Board Member 2007- 2010
QUOTED:
December 5, 2011- US Travel Industry Calls for More Visas for Chinese-CCTV NEWS
December 5, 2011- US Travel Industry Calls for More Visas for Chinese-CCTV NEWS
July 2013- ASIA PACIFIC DEFENSE NEWS- Article on Burma, China, Malaysia and South Korea
September 2012, Tashkent, Republic of Uzbekistan
Invited guest of the Government of the Republic of Uzbekistan to exchange views and participate in a global conference on "The role and importance of small business and entrepreneurship in the implementation of socio-economic policy in the Republic of Uzbekistan"
May 25th-30th 2013 Baku, Azerbaijan
Invited guest of the Government of Azerbaijan to attend US-Azerbaijan Convention, a major policy forum composed of US members of Congress, state legislators and representatives from non-profits with a focus on finding ways to strengthen and improve economic, military and political ties between US and Azerbaijan
May 30th-June 3rd Istanbul, Turkey
Invited guest of the Government of Turkey and the Rumi Forum to participate in dialogue with Turkish political and religious leaders to strengthen cultural, religious and political understanding between Turkey and the United States
Miscellaneous:
Currently meet periodically over lunch with representative from Embassy of Malaysia to discuss China and the ASEAN region. I recently briefed the representative on my trip to Azerbaijan and Turkey.
In 2010 and 2011 I previously met with representatives from the Embassy of Japan over lunch to discuss anti-trust, business and legal issues in China affecting international trade and investment
Invited to sit at head table at the National Press Club during luncheon series featuring Captain Wei Jiaofu, CEO for COSCO (China Ocean Shipping Company), IRS Commissioner Douglas Shulman, Congressman Barney Frank, Congressman Sandy Levin, Congressman Dick Armey and most recently at the Ford luncheon featuring David Gergen and Congressman Fred Upton.
Met with Afghan Trade minister at CACI in 2010 concerning China's business and reconstruction efforts in Afghanistan and the Middle East
Yearly briefing with Russian small businessman and entrepreneurs regarding identification of potential joint venture partners in the United States. Organize visit to US Small Business Association
Formalized and reviewed contract with Research International to help identify and assist in locating potential joint venture partners in Russia to do pylon construction
Organized Eurasia Center business and cultural briefing at Hong Kong Consulate in Washington, D.C. (2010) for individuals and companies interested in learning about doing business in China through the legal and business framework of Hong Kong. Introduced Donald Tong-Ambassador for Hong Kong.
Organized Eurasia Center business and cultural briefing at Embassy of Latvia (2011) for individuals and companies interested in learning about doing business in Latvia. Introduced Andrejs Pildegovics who was Ambassador of Latvia at the time.
Organized reception in Washington, D.C. for Donald Kurth, Candidate for California Assembly District 63- Raised over $50,000 in one night.
Ralph Winnie, Jr.'s Article on Shale Gas in China Green Tech magazine
Over the past twenty years, China has
experienced dramatic economic growth,
transforming itself from a basically agrarian
society into the world’s second largest
economy behind only the United States.
Since the initiation of economic and political
reforms in 1978, China has produced an
average annual growth rate of 10%. From
1978 to 2008, China increased its GDP 83
times (NBS, 2009) and lifted over two
hundred million of its people out of poverty.
This has continued to generate increased
energy supply. Within China’s energy
sector, production was stimulated by the
clarification of mineral exploration rights,
the development of transportation and
roadway infrastructure projects,
diversification of management structures
and the liberalization of environmental and
safety regulations. Rising living standards
necessarily create more domestic
consumption, including high-energy items
such as air conditioners, refrigerators and
televisions. Consequently, the growing use
of automobiles by the Chinese consumer is
creating energy security concerns as China
must routinely import more than half of its
oil from countries such as Iran, Russia and
Venezuela. Therefore, it is not surprising
that China is scrambling to secure its future
sources of energy today. The Chinese are
continuing to seek new sources of energy
fuels throughout the world and have even
considered going into outer space,
considering the possibility of mining the
moon for Helium 3 which is used in nuclear
fusion research and potentially a second
generation fusion fuel.
Furthermore, as the sale of automobiles
in China is expected to surpass those in the
United States within the next five years,
there is growing concern in China about
energy security, power capacity shortages as
well as air pollution which are generating an
increased desire on the part of the Chinese
Central Government to focus on alternative
technologies, including clean coal
technology, nuclear power and renewable
sources of energy. In fact, China is
expected to invest over 10 billion in support
of renewable energy development targets for
2020. However, achieving these targets
will depend on several factors, including
well-trained and highly skilled personnel,
cost reductions in technology and effective
distribution of power generation (electric
grids) through electric utilities. In addition,
international co-operation since the 1990’s
has recognized the importance of
improving energy efficiency in China’s
industrial sector, ranging from pilot projects
involving industry-government power
contracts to the development of energy
service companies nationwide, including
energy performance standards for the
Chinese industry. When China’s energy
consumption surged in 2000, a landmark
renewable energy law enacted in 2005,
supported continued expansion of renewable
energy as a national policy objective.
China obtains roughly 8% of its energy and
about 17% of its electricity from renewable
energy like wind power and solar power
(biomass and biofuels). These percentages
are projected to rise to roughly15% and 21%
respectively by 2020.
In terms of energy consumption, China
is now second only to the United States. It
is the world’s NO.1 consumer of coal, steel
and copper and as a consumer of oil and
electricity; it is second only to the United
States. Given China’s vast coal reserves,
coal is currently China’s main fuel source
and supplies roughly two-thirds of its energy
needs. A decision had to be made by the
Chinese Central Government to exploit such
an abundant and reasonably inexpensive
resource, but coal is clumsy, inefficient, low
grade and hard to adopt to modern energy.
As China’s coal demand has been rising,
coal production has been falling behind.
70% of electricity in China is based on coal
which is an increase of 19% since 2000.
Furthermore, through the use of coal over
the past twenty five years, China has now
become the largest emitter of greenhouse
gases in the world. The IEA estimates that
China, which generates more than 70% of its
electricity with coal, will build 600 gig watts
of coal fired power capacity within fifty
years. The amounts of gig watts are almost
as much as is currently being generated with
coal in the European Union, Japan and the
United States combined. Also, domestic
supply of coal in China has failed to keep up
with demand because China’s coal is
generally located in the remote northern and
western areas of the country and is quite far
from coastal cities where energy demand is
strong. China’s coal mines are old and the
coal is very deep underground and
expensive to extract.
Increased amounts of stimulus funding
by the Chinese Central Government have
been directed at massive economic and
infrastructure development projects in the
rural areas, including establishing an
elaborate freeway system and a new
east-west passenger railway line as well as
paving existing roadways. Therefore,
existing tracks for coal transport can then be
freed for coal transport which is currently
hampered by congested railways and roads,
making domestic deliveries of coal
dangerous, unreliable and more expensive
than imported coal.
Since coal based power is directly
responsible for such a major share of global
CO2 emissions, it will be imperative for
China to develop new technologies that
allow energy to be extracted from coal
without noxious emissions. Given the
rapid economic development in China,
China has become not only a major energy
consumer, but also a significant energy
producer. Domestic coal accounts for
roughly 76% of the total production,
followed by crude oil at 13%, hydropower at
8% and natural gas at 3%. Furthermore, as
coal fired generation and heavy
manufacturing make up a significant share
of China’s emissions, the coal boom has
created many profitable deals. Last year,
the coal industry made a record number of
mergers and acquisitions totaling roughly 52
billion and Chinese state backed firms have
continued to invest heavily abroad.
Even though China is one of the
biggest energy producers and consumers, the
mentality and perspective of the Chinese
Central Government reflects a conundrum
regarding coal. On the one hand, the
Chinese Central Government is concerned
with making an efficient contribution to
energy security in the world markets.
China has exported over 13 million tons of
charcoal and over 80 million tons of coal.
According to President Hu Jintao, at whose
lunch I had the privilege of attending back in
Washington, D.C. in late January, “ China is
closing down a dirty, coal-fired power
generation facility at the rate of one every
one to two weeks, putting up a wind turbine
at the rate of one every hour and has set a
target by 2020 of reducing carbon pollution
by 40-45% per unit of gross domestic
product.” Indeed, China has embarked on
the adoption of a vast program to build
hydro nuclear, wind and solar power stations
to reduce the proportion and amount of
electricity China would generate using coal.
However, while China has developed the
technology to build high technology power
plants, it comes at the end of a long cycle of
construction building lower tech coal-fired
plants as well and construction has now
slowed dramatically because of the
economic slump. Furthermore, it cannot be
refuted that China has adopted a process
(“Ultra-Supercritical Technology”) that uses
hot steam to achieve the highest efficiency.
China has also drastically cut costs by
building energy efficient power plants
throughout the country, making it more
efficient to build a power plant in China than
to build a less efficient coal-fired plant in the
United States.
However, the overall perspective on
coal echoed by the Chinese Central
Government is that coal fuels the Chinese
economy. They believe that if China is to
continue to generate jobs, economic stability
and continue to lift people out of poverty, it
cannot turn its back on coal as a source of
wealth, no matter how dangerous the mines
or how dirty the electric generators may be.
The Chinese Central Government will
correctly point out that coal powers half of
the nation’s railways and supplies over half
of the country’s feedstock. The power
companies in China are rumored to wield
great political leverage, much like the
tobacco and railroad industries did in the
United States for many years, and as long as
the power companies do not challenge the
Chinese Central Government regarding price
powers on technology, they are allowed to
expand China’s coal fixed electricity system
at a relatively modest pace. In short, the
Chinese power companies have traditionally
wanted to stay with what they know and that
would be coal. Furthermore, while the
power stations currently being built in China
to feed the new electricity grid is purported
to be very efficient and less polluting that
many of China’s older coal plants, coal is
very cheap and hurts efforts to reduce
greenhouse gas emissions.
China is doing a great deal to replace
old, highly polluting stations by building
clean state of art coal-fired power stations at
an average of one a week to feed its
booming economy, but there is no such
thing as a clean coal-fired plant. Indeed,
Changhua Wu, China Director of the
Climate Group in Beijing, echoes the
sentiment of many Chinese officials when
he repeatedly states that “in China you have
to try everything because of the scale of the
economy and the speed of growth.” It has
been argued that China should seriously
scale back its extensive nuclear energy
program as a result of the earthquake in
Fukushima even though nuclear has been a
part of the picture in China to move away
from coal. While it is true that earthquakes
pose a real threat in many parts of China,
according to Changhua Wu, “all energy
options have risks” and if China gave up its
nuclear program in response to Fukushima,
or at least delayed construction of new
nuclear power plants, China would
necessarily have to rely on increased coal
usage which poses greater pollution and
environmental challenges for the Chinese
people which the Kyoto Protocol Agreement
strives to avoid. Consequently, the costs of
nuclear power have fallen drastically in
coastal China, whereas coal involves the
importation of sources from abroad and the
expensive transportation of coal from inland
China over an overextended rail/roadway
system. These factors necessarily make
nuclear close to becoming economically
competitive with coal as it has become cost
effective for the Chinese moving in the
direction of nuclear power. This is
especially true when recognizing that
China’s earthquake challenge lies in moving
towards Japanese standards of construction
as relatively few deaths in Japan resulted
from the earthquake itself or any radiation
from the nuclear reactor. Rather, the
ensuing tsunami resulted in most of the
deaths. Furthermore, it was not surprising
when China’s Vice-Minister of
Environmental Protection, Zhang Lijun, was
quoted as saying, “ We can learn lessons
from Japan in the development of nuclear
power in China.”
In an effort to alleviate some of China’s
reliance/addiction towards coal as a major
source of China’s energy policy, the Chinese
Central Government has been actively
looking at other cost efficient alternative
energy sources. This has led the Chinese
to seriously embark on an international
campaign aimed at development and
exploration of shale gas as part of China’s
energy strategy focusing on natural gas.
China is drafting a National Shale Gas
development plan, studying relevant policies
and establishing pilot shale gas development
areas. It is interesting to note that, in my
discussions with younger Chinese energy
ministry officials, I found a large degree of
enthusiasm for shale gas as a cheap,
relatively cleaner alternative to coal. It
appears that this attitude is slowly beginning
to permeate the upper decision making
levels of the Chinese Central Government.
The Chinese have targeted North
America because it has the largest amount of
shale gas and China recognizes the
enormous opportunity for shale gas
exploitation as the gas produced from shale
has over 40 billion cubic meters which
accounts for 8% of all the gas production.
Until recently, China has not carried out a
comprehensive study on shale gas, but it has
recently been determined that Sichuan and
Zhungaer are two areas containing very
large shale gas deposits.
China is believed to have significant
shale gas potential. The preliminary findings
by the United States shows that the shale gas
resources in China might be 100 trillion
cubic meters, the same level as that of the
United States. According to the Ministry of
Land and Resources in China (MLR),
reserves of shale gas that can be mined
amount to 26 trillion cubic meters. In April
2010, the MLR announced that the shale gas
field in Chongqing would be available for
commercial production starting this year.
The Ministry of Land and Resources in
China has a goal of building its total
production capacity to 3-5 billion cubic
meters from 10-15 leading shale gas fields
by 2015 and a further expansion to 15-30
billion cubic meters from 20-30 fields by
2020. The goal is for shale gas production in
China to be equivalent to 8-12% of the total
annual domestic natural gas output. Besides
the MLR in China, the energy regulatory
agency in China, the National Energy
Administration (NEA), have also begun
developing policies to support exploration,
development and utilization of shale gas
since 2020. Shale gas has been
incorporated by the Chinese Central
Government into the “National Energy
Strategies Toward 2030.”
When oil prices crashed, most countries
turned inward, focusing on their respective
domestic agendas in an effort to minimize
political fallout. China, on the other hand,
saw an opportunity to penetrate the oil
market because the Chinese recognized that
it would be highly unlikely that the price of
crude oil would ever be as cheap again.
Therefore, China embarked on a worldwide
campaign to seek out new sources of crude
oil no matter where it happened to come
from. The Chinese Central Government
became notorious for making deals just to
get a cut of future production. China
National Offshore Oil Corporation, CNOOC,
paid over 1.3 billion dollars for a stake in
Angola’s profitable offshore oil fields as
China recognized Angola’s role as Africa’s
largest oil producer. Now China’s quest
for energy security has led them to focus on
shale gas that will create a huge opportunity
for U.S. companies to engage in joint
venture partnerships with Chinese oil and
gas companies seeking to learn the
procedures and mechanisms of shale
production. China’s first step towards
producing its shale gas resources will be a
learning experience and right now the
United States does shale gas exploration and
production better than any other country in
the world.
China has watched the shale gas boom
explode within the United States for the past
few years and is looking to emulate the
efforts of the United States in shale gas
production. China holds roughly 30 trillion
cubic meters of shale gas resources and the
goal of the Chinese Central Government is
to have about 12% of their natural gas
production come from shale gas wells by
2020. However, extracting natural gas from
the shale is quite difficult and requires a
little bit of western know-how and
entrepreneurial skills to understand the
mechanics of shale gas exploration and
production which, as I stated earlier, is
something that companies in the United
States have been perfecting for many years.
China is already beginning to penetrate
the shale gas arena. In 2009, China enlisted
the help of Royal Dutch Shell to begin its
first venture in developing China’s shale gas.
In September 2010, China Petroleum
Corporation (SINOPEC) signed a joint
venture partnership with Chevron to develop
shale gas near Guiyong City. Sinopec’s
goal is to increase production from various
unconventional sources, such as shale gas, to
approximately 2.5 billion cubic meters
within the next five years. Furthermore, in
October 2010, CNOOC, China’s biggest
offshore oil producer announced a deal with
Chesapeake Energy where CNOOC (China
National Offshore Oil Company) paid 1
billion for one third of the state assets of
Chesapeake Energy in the Eagle Ford shale
gas site which is located in South Texas. In
addition, Petro China, the largest oil
producer in China, said in early February
that it will pay 5.4 billion for a stake in
Calgary based Encana Corporation’s shale
and deep well gas assets. Furthermore, it is
worth noting that Petro China recently
announced that the company had finished
the drilling of China’s first horizontal shale
gas well, the Wei 201-H1 well, in Sichuan
province in southwest China. Petro China
drilled 1,079 meters horizontally at the Wei
201-H1 well after sinking vertically 2,823
meters. The conventional wisdom in China
is that horizontal shale gas wells are more
productive and have proven to be the most
commercially viable method of extracting
shale gas based on the success of shale gas
development in the United States. Since
China is attempting to unlock massive
amounts of shale gas reserves to meet the
increasing demands of its rapidly growing
middle class, but because China has not
been able to access these deposits due to a
lack of technical expertise, China’s National
Energy Administration (NEA) is studying a
policy of setting up pilot exploration areas
and is attempting to industrialize shale gas
as early as possible. The Chinese Central
Government is making a concerted effort to
make major technological breakthroughs in
developing shale gas because, according to
Xinhua News Agency, the Chinese Central
Government wants to “optimize the nation’s
energy structure”. It is the belief that China
could conceivably produce enough clean
energy to take the pressure off of the coal
and the automobile industries in China and,
thereby ensure that shale gas, China’s
natural gas gamble, becomes a resounding
success. Sources from the Ministry of Land
and Resources of China have acknowledged
that there has been and will continue to be
public bidding for shale gas blocks in the
first quarter of 2011. China is keen to kick
start the sector by introducing more
competition in the bidding process.
While China’s natural gas production
in 2010 stood at 94.48 billion cubic meters,
the Chinese Central Government believes
that consumption could reach 300 billion
cubic meters by 2020. As China pursues
policies aimed at raising and tripling its
share of natural gas, as part of raising
China’s total energy use to 10% by 2020,
which is up from 4% at present, foreign
participation, expertise and creativity is
essential. Once China meets its natural gas
goals through the development of shale oil,
foreign participation becomes less lucrative
and more and more problematic. Bilateral
co-operation becomes difficult to maintain
in the long run. Issues concerning
proprietary knowledge relating to shale gas
exploration and intellectual property
considerations will have to be examined in
the near future. In fact, as previously stated,
China still faces significant hurdles to
getting gas out of the ground on its domestic
soil, transporting gas and delineating the
size of the reserves. However, the most
pressing issue, moving forward, is clarifying
the legal framework for contracts. This
is to ensure protection of intellectual
property rights/technologies of foreign
companies involved in the shale gas sector.
These issues will certainly be raised in the
near future now that the United States and
China recently signed a co-operation
agreement last November to jointly appraise
shale gas reserves in Northern China and
Jiangsu province. This issue is further
highlighted by the fact the Statoil,
headquartered in Norway, has been giving
serious consideration to teaming up with
Sinopec on investigation and study of
offshore oil and gas reserves in China.
China recently raised interest rates in
response to Europe’s worsening debt crisis.
For example, in Ireland, the housing market
forced the country to take over three large
financial institutions and a financial bailout
of Greece put pressure on commodities and
raised concerns about diminished demand.
The recent earthquake and tsunami in Japan
have also contributed o global uncertainty in
the oil and commodity market. Furthermore,
the shale gas sector in China currently lacks
policy support for certain tax breaks and
other financial incentives currently offered
to other sectors in China. The Chinese
Ministry is currently pushing the Chinese
Central Government to extend the same
incentives already offered to coal methane
developers by pushing for the establishment
of a renewable industry services system
along with tax incentives, such as
depreciation deductions on equipment,
waiving the corporate tax rate for a fixed
period of time and a tax holiday. However,
insufficient pipeline infrastructure in China
currently hampers shale gas development
and severely impacts market prices.
Therefore, when assessing the
long-term projections for shale gas
exploration, it must be recognized that
China will increase its natural gas demands
by 77% in 2015 from this year as China
aggressively pushes for the use of cleaner
burning fuels to curb carbon emissions.
In the long run, shale gas has a large
potential for supplying the Chinese market
and its development will continue to attract
much interest from many countries,
including the United States. China holds the
world’s third largest coal reserves after
Russia and the United States and China’s
environmental restrictions for shale gas are
less strict than in other countries. In China,
most gas shale gas fields are located in
thinly populated areas, compared to Europe,
which makes shale gas development and
exploration very lucrative for foreign
companies who are increasingly entering the
Chinese shale gas market under joint
ventures with Chinese companies. However,
serious water shortages in China may pose a
problem for shale gas exploration as large
amounts of water are essential to the
development of shale gas. Furthermore, in
the United States, exploitation of shale gas is
based on the price which is roughly in the
$100 range. The industry ebbs and flows
based on the market price. In China, it is
well established that the Chinese Central
Government is able to control many
economic factors that make long-term
projections for shale gas exploration in
China very strong. These factors adopted by
the Chinese Central Government to support
the development of shale gas include
establishing sustainable and stable market
demand through favorable price policies,
mandated market share policies,,
government investment and government
concession programs. In an effort to
ensure the projected success of shale gas
exploration, the Chinese Central
Government also has the ability to set
renewable power tariffs and cost sharing
policies as well as increasing fiscal input
and tax incentives. Accelerating
technological improvement and industry
development through the integration of
various renewable energy technology
resources, such as research institutes, are
additional options that the Chinese Central
Government can implement at its own
discretion.
In conclusion, the future of China’s
shale gas industry is enormous, given
China’s 2015 natural gas demand may rise
to 77% and the Chinese Central Government
is making concerted efforts to encourage
foreign participation in the development and
exploitation of China’s shale gas industry.
China has further taken the initiative of
investing in various shale gas projects in the
United States and Canada in an effort to gain
the proprietary understanding of the
technology involved in shale gas
development. As China’s national oil
companies increase their shale gas activity,
they will look for partnerships in the initial
phase of development, creating a window of
opportunity for qualified foreign players to
gain access to China’s market. China
recognizes shale gas as the clear alternative
to coal in an effort to reduce its carbon
emission footprint and move away from coal
fired power plants towards a cleaner, safer
technology in an effort to meet the
increasing demands for energy among the
rapidly growing middle class in China.
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