Full steam ahead for Asia-Pacific

Soorya Tejomoortula, GlobalData, India, takes a look at upcoming pipeline projects in Asia-Pacific, and outlines the significant growth expected in the region.

Asia-Pacific is one of the leading regions globally for upcoming oil and gas trunk/transmission pipeline projects, accounting for about 40% of the total additions by 2025. Close to three-quarters of these upcoming additions are expected to be through natural gas pipelines, while the rest include product and crude oil pipelines. Increase in industrial demand, especially from power, petrochemical, and fertilizers sectors, as well as growing domestic demand in different countries, have been contributing to the growth of gas pipelines in this region. Efforts to reduce greenhouse gas (GHG) emissions and development of LNG import terminals in major demand centres in the region are also contributing to gas pipeline growth.

Figure 1. Upcoming oil and gas pipeline additions in Asia-Pacific 2020 - 2025.

Figure 2. Upcoming oil and gas pipeline additions in key Asia-Pacific countries 2020 - 2025.

Uttar Pradesh, Bihar, Jharkhand, and West Bengal. The GAIL (India) Ltd owned and operated pipeline will supply gas to city gas distribution networks, fertilizer plants, and refineries in these states. The Mallavaram - Bhopal - Bhilwara - Vijaipur gas pipeline is another major pipeline project in India with a total length of 2042 km. The GSPL India Transco Ltdoperated pipeline will supply natural gas from D6 fields in the Krishna Godavari basin to the states of Andhra Pradesh, Telangana, Maharashtra, Rajasthan, and Madya Pradesh. The proposed pipeline is also in proximity to some of the LNG import terminals planned on the east coast of India such as Kakinada and Yanam and has the potential to transport gas from these terminals as well. Although most upcoming pipelines in India are being constructed to supply gas, several pipelines are also being built to transport petroleum products. The 1212 km Paradip - Hyderabad pipeline, which is likely to become operational in early 2021, is being developed to enhance the availability of diesel, jet fuel, and kerosene in key demand centres in the states of Andhra Pradesh, Telangana, and Orissa. China India’s neighbour, China, which has one of the largest natural gas pipeline networks in Asia-Pacific, is further planning to expand its network to decrease GHG emissions and cater to the growing India demand for natural gas in its domestic market. China, one Within Asia-Pacific, India has embarked on several large trunk of the world’s largest emitters of GHG, has announced its gas pipeline projects as it plans to improve natural gas share plan to become carbon neutral by 2060. This plan holds high in the energy mix from about 6% to 15% by 2030. The country significance for its natural gas sector, including gas pipelines. is also planning several LNG import projects, which would The country has already begun to transition from coal to complement the existing and planned pipeline infrastructure cleaner energy by increasing the natural gas share in the and boost gas consumption. Apart from LNG imports, energy mix. This transition, coupled with strong industrial the Indian government is also planning to boost domestic and domestic gas demand, has provided a major boost to the production and develop the gas market by providing equal development of domestic gas transmission and gas import access to the gas pipeline grid to all players. India is also pipelines in the country. planning a unified gas tariff for its gas grid, which will benefit China would be strengthening its domestic gas pipeline buyers located far away from production and import facilities. network over the next five years. A major pipeline project

India’s plans to create a gas-based economy are is Sinopec’s (China Petroleum & Chemical Corp’s) 2293 km reinforced by the scale of its efforts to strengthen its Erdos - Anping - Cangzhou pipeline, which will deliver gas pipeline infrastructure. Several major gas pipelines are to consumers in Hebei province from production areas in expected to become operational in the country over the the Erdos basin. Phase I of this project has already become next five years. The planned Jagdishpur - Haldia pipeline operational and transports gas from Sinopec’s regasification is one of the longest and has strategic importance as it terminal in Tianjin, which started commercial operations in connects the northern and eastern parts of India. The 2018. Tianjin - Inner Mongolia, a 1279 km pipeline, is another 2655 km pipeline is expected to supply natural gas to major project under development. This pipeline is planned domestic, transport, and industrial sectors in the states of to transport gas from coal-to-gas plants in Inner Mongolia

and Shanxi province to Hebei, Beijing, and Tianjin – key gas-consuming centres for natural gas. Additionally, a 530 km Yantai gas pipeline is being planned in Shandong, a centre for mining, manufacturing, and power industries, which is currently highly reliant on coal. The Yantai gas pipeline will supply gas to six cities in the province and reduce the province’s dependence on coal.

On one hand, China is looking to strengthen its domestic pipeline network, and on the other, it is building crosscountry pipelines that may be essential to its energy security. The Power of Siberia 1, a gas pipeline between China and Russia, delivers gas to northeast China from Siberia. Another gas pipeline, The Power of Siberia 2, is expected to supply gas from Russia to western China towards the end of the coming decade. These pipelines are touted to cement political ties between the two nations, as much as they are for gas trade.

Pakistan Pakistan, India’s other neighbour, is also focusing on expanding its gas pipeline infrastructure. In collaboration with the Russian government, Pakistan has recently announced a pipeline that would connect an LNG import terminal in Karachi to Kasur in Punjab province. The 1122 km long pipeline, which uses Russian technology and materials, has been renamed as Pakistan Stream Gas Pipeline from earlier North - South gas pipeline. Pakistan is also part of the TAPI (Turkmenistan - Afghanistan - Pakistan - India) gas pipeline, which aims to transport gas from the Galkynysh gas field in Turkmenistan to Afghanistan, Pakistan, and India. The pipeline will provide long-term energy security to Pakistan, as well as revenues in the form of transit fees. However, considering the geopolitics involved between India, Pakistan, and Afghanistan, the development of the pipeline has been delayed.

Construction of petroleum products pipelines in Pakistan is also set to receive a fillip, as Pakistan Oil Refinery and Marketing Policy 2020 was launched to incentivise companies involved in refining and marketing of petroleum products. The policy also aims to deregulate prices of kerosene and jet fuel apart from deregulating ex-refinery prices and margins on gasoline and diesel, in a phased approach. Pakistan is also building a 427 km pipeline connecting Karachi to Peshawar to transport motor gasoline and high-speed diesel across the country.

Indonesia While countries such as India and China are planning pipelines to meet growing domestic gas demands, Indonesia is vying to double its gas production by 2030. However, weak domestic demand growth and slow expansion of gas pipelines are seen as the main hurdles to double gas production by 2030. The Gresik - Semarang pipeline, one of Indonesia’s upcoming gas pipelines, has been marred with land acquisition hurdles that led to construction delays. The pipeline, which is a part of the integrated TransJawa pipeline stretching up to 600 km, is expected to supply gas to Central Java and East Java. The pipeline is finally expected to start operations by next year.

Unlike other major countries in Asia-Pacific, instead of directing its efforts just to build gas pipelines, Indonesia is focusing on an optimal mix of oil, gas, and product pipelines. PT Pertamina is planning to build a 367 km crude oil pipeline. Expected to boost oil production, it connects Rokan oil block to the Dumai refinery. The country is also planning two product pipelines in the next five years. The construction of a 180 km Lomanis - Rewulu product pipeline is underway, which would connect Cilacap, Central Java, to Rewulu. Other product pipelines such as the 128 km Lomanis - Tasikmalaya, and 93 km Cikampek - Plumpang II would supply fuel to remote areas of the country.

Australia Australia is another key country in Asia-Pacific with a significant gas pipeline project portfolio. Being one of the largest countries in the world, it has built a formidable gas pipeline network to supply its domestic market as well as the LNG export terminals. To further develop its pipeline network, the Australian government is taking measures to create a more transparent gas hub that could potentially boost the country’s gas infrastructure and pipeline network. It announced a National Gas Infrastructure Plan in September 2020 that identifies important pipelines and necessary infrastructure for development. The country is also planning to reform regulations on gas pipeline infrastructure to bring in greater transparency and competition.

Several upcoming pipelines have been planned in Australia in the next five years to overcome any gas shortage in the country. The 585 km proposed pipeline from the Glenaras Gas Project in Queensland would address the domestic gas demand in Eastern Australia. Some pipelines are being built to reduce transportation distance and costs. The 950 km Amadeus Basin - Moomba is one such announced gas pipeline. This pipeline will reduce over half the gas transportation distance for one of its equity owners, Central Petroleum Ltd, which currently supplies gas from its fields in the Northern Territory to the gas hub at Moomba in Queensland over a 2200 km pipeline route. Gas from the Moomba hub is to be subsequently sold in the East coast market of Australia. Although most of these proposed pipelines in Australia are at early stages of development, which might add some uncertainty to these projects, a strong stand by the government to safeguard Australia’s gas sector might provide the required impetus for their development.

The COVID-19 pandemic, which has impacted the global oil and gas sector, seems to have had little impact on the pipeline sector in Asia-Pacific. Except in Australia, several of the upcoming pipeline projects in the region are on course to start operations close to their scheduled timelines. In Australia, a major project impacted by the pandemic is the Scarborough - Pluto (434 km) pipeline project, which is likely to be pushed to 2026 with its FID delayed by a year. Similar situations are being faced by the Browse - North West Shelf and Barossa Gas Export pipeline projects, whose start years would be delayed due to delayed FIDs.