If a China-Taiwan crisis/conflict occurs within two to five years, China’s natural gas supply may be affected as most of its gas comes from LNG imports, especially from Australia .
That’s what Dryad’s global analyst Andrea Peniche Cobo told Rigzone, adding that in a crisis, LNG imports are more vulnerable to interception or blocking than pipeline gas passing through countries friendly or neutral.
“However, China has recognized the vulnerability of LNG dependence and is working to increase its pipeline imports,” Cobo said.
“It has the long-running Central Asian gas pipeline connecting Turkmenistan to China, and it also has smaller pipelines connecting Russian gas supplies to China. Given the current war in Ukraine and Europe’s large shift away from gas Russian, Russia has hedged its bets on a growing eastern market, with China a key figure in this strategy,” Cobo added.
“In turn, China is also poised to become increasingly dependent on Russian gas as it looks to increase pipeline capacity and possibly build new pipelines between Russia and China,” Cobo continued.
Dryad’s global analyst noted, however, that growth in Russian gas imports will not happen immediately.
“Therefore, China is more likely to be affected before its joint ventures with Russian gas happen,” Cobo said.
“In short, if a crisis manifests after five years, it is increasingly unlikely that China will be greatly affected in terms of natural gas supply,” Cobo added.
oil
As for whether the US will impose an oil embargo or not, it remains unlikely, Dryad’s global analyst noted.
Cobo noted that this action could have lasting negative effects on US-OPEC relations, as well as an accelerating effect on the move away from the petrodollar system.
“Furthermore, this type of US action could jeopardize the extremely valuable contracts that private Western oil and gas companies have with Middle Eastern OPEC suppliers,” Cobo said.
“However, with an American blockade the question arises as to whether this would be the case In fact implementation or by proxy. A In fact “The blockade would mean that the US (possibly in alliance with other countries) would prevent ships from entering and leaving China’s ports through physical interception,” Cobo added.
The analyst emphasized that this form of blockade requires a high level of force, especially in an area as large as China’s coast.
“Therefore, both logistically (as it depletes potentially vital resources) and politically (due to the aforementioned negative consequences for US-OPEC relations), a In fact blocking is unlikely,” Cobo said.
“On the other hand, in a proxy blockade, the US would use indirect means to influence other parties (whether exporting countries or private companies) to limit or cancel their exports to China. Therefore, if a US oil blockade, is more likely than implementation by proxy,” Cobo added.
“Furthermore, in the event that OPEC oil exports to China from the Middle East were restricted, the growing BRICS alliance (especially between Russia, Iran and China) would likely cause Iran to push further their exports to China,” Cobo said.
Import-export
Given its total dependence on energy imports, China has a massive vulnerability in this regard, Cobo told Rigzone. However, being one of the largest energy importers in the world also has its strengths, the analyst highlighted.
“Most of China’s energy suppliers have close relations with China or have remained neutral with China,” Cobo said.
“For many energy exporters, the loss of the Chinese market would have negative effects for their own economies. Therefore, it is unlikely in many cases that these exporters would be willing to unilaterally stop exports to China,” Cobo added.
“By far the most likely to limit their exports to China would be Australia and the US,” Cobo said.
Biden meets with Xi Jinping
US President Joe Biden meets with President Xi Jinping of the People’s Republic of China (PRC) in Bali, Indonesia on November 14, 2022.
According to a statement posted on the White House website, the two leaders “spoke candidly about their respective priorities and intentions on a range of issues.”
“In Taiwan, he detailed that our one China policy has not changed, the United States opposes any unilateral change to the status quo by either side, and the world has an interest in maintaining peace and stability in the Taiwan Strait.”, the White House statement noted.
In a statement posted on Twitter on April 20, European Commission President Ursula von der Leyen announced a “very good exchange” with President Biden “on strategic issues for the EU and the US.” These included “relations with China” and the “need for peace and stability in the Taiwan Strait,” von der Leyen said in the statement.
Very good exchange with @POTUS Biden on strategic issues for the EU-US, including:
– relations with China, need for peace and stability in the Taiwan Strait
– Support Ukraine against the illegal invasion of Russia
– Preparation of the G7 summit in Hiroshima
– Development in the Maghreb— Ursula von der Leyen (@vonderleyen) April 20, 2023
In a US State Department fact sheet published in May 2022, the State Department noted that the US approach to Taiwan has remained consistent across decades and administrations.
“The United States has a long-standing one-China policy, which is guided by the Taiwan Relations Act, the three US-China Joint Communiqués, and the Six Guarantees,” the fact sheet states.
“We do not support Taiwan independence; and we hope that the differences between the straits will be settled by peaceful means. We continue to have an abiding interest in peace and stability in the Taiwan Strait,” he added.
“Pursuant to the Taiwan Relations Act, the United States makes available defense items and services that are necessary to enable Taiwan to maintain a sufficient self-defense capability and maintain our ability to resist any use of force or other forms of coercion that may endanger the security, or the social or economic system, of Taiwan,” the fact sheet continued.
To contact the author, please send an email andreas.exarcheas@rigzone.com
