Energy security in the time of market turmoil

China has been stepping up efforts to deepen global cooperation in the gas sector. State-owned China National Petroleum Corp has been promoting its Central Asia-China Gas Pipeline project that originates in Gedaim, a city on the Turkmenistan-Uzbekistan border, and runs through central Uzbekistan and southern Kazakhstan before reaching Horgos in China's Xinjiang Uygur autonomous region.

Currently, the project has three parallel lines each running for about 1,830 kilometers. Construction of Line A and B commenced in July 2008, and construction of Line C started in September 2012.

In 2013, China signed intergovernmental agreements with Uzbekistan, Tajikistan, and Kyrgyzstan for Line D. CNPC said Line D, when operational, will give the Central Asia-China Gas Pipeline a capacity to deliver 85 billion cubic meters annually－the largest gas transmission system in Central Asia.

China also cooperated with Russia to build a gas pipeline, which will transit through Mongolia.

"It's necessary to accelerate the construction of Line D, start negotiation on the construction of China-Mongolia-Russia natural gas pipeline, continue to consolidate oil and gas cooperation with countries in the Middle East such as Saudi Arabia, the United Arab Emirates and Iran, and focus on strengthening energy cooperation with Argentina and other major oil and gas suppliers," Jing said.

To avoid the risk of exchange rate fluctuations, it is necessary to speed up the establishment of an RMB-denominated international energy trading system covering oil, gas and new energies, she said.

Agreed Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation. "China-Russia energy cooperation now has a 'window' of opportunity as the energy industries in both China and Russia are highly complementary. China has a big market in need of energy resources and Russia has abundant energy resources," he said.

"China should also actively seek cooperation with Angola and Venezuela, and sign long-term cooperation contracts with them for stable and diversified sources of energy imports."

Bai also said European countries are also likely to turn to the United States for shale oil imports, as the commodity can be a substitute for crude oil, which may offer an opportunity of further development of the industry in the US.

"Global energy trade is likely to see a big change and China should actively seize opportunities of development and avoid risks to energy security," he said.