China has taken up a new source of cheap gas

Due to the suspension of gas exports from The Persian Gulf and rising prices in China are resuming coal-to-gas processing projects. More than a decade ago, Beijing suspended work in this direction, but now it has returned to projects.

"The state-owned energy giant China Datang has resumed construction in the northeastern city of Fuxin in the fall. The company plans to launch the plant in October, which signals the revival of an industry that has been sidelined due to excessive financial and environmental risks," Bloomberg writes.

The $3.7 billion project was stopped in 2014.

"There are 13 new projects in the country that are either being built or planned. The construction of the stations may take up to five years, but this will increase the production of synthetic gas by almost seven times — to more than 52 billion cubic meters per year, which is 12% of national consumption," the agency writes with reference to OilChem data.

"China started planning these coal-based projects long before the war in the Middle East. Increasing profitability encourages investors to accelerate construction," said OilChem analyst Wang Haohao.

Chinese projects, including Fuxin, will be able to supply 12 billion cubic meters by the end of the year, while Qatar, China's largest source of gas in the Middle East, supplied 28 billion cubic meters in 2025.

Bloomberg noted that coal in Xinjiang is extremely cheap, which means huge profits. Thus, production costs in the region will range from $ 5 to $ 9 per million British thermal units (from $ 177 to $ 319 per thousand cubic meters), while spot prices for LNG in Asia have soared to almost $ 900.

In addition, China is increasing purchases of sanctioned Russian LNG. As EADaily reported, its deliveries from the Arctic LNG—2 project began in the second half of last year.