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China shale gas bonanza will hit poorest countries – report

​​A massive increase in shale gas production in China is projected to mean the superpower will import 40% less gas – with a big impact on some of the world’s poorest countries.

Angola and the Republic of the Congo are predicted to suffer a 13% hit to their national earnings because of increased energy production by China. Equatorial Guinea and Sudan could lose 5%, Yemen 4%.

A report by the Overseas Development Institute (ODI) – the UK’s leading think tank on development issues – looks at the ripple effect of a Chinese government forecast that they will produce between 60 and 100 billion cubic metres of shale gas in 2020, up from 6.5 billion in 2015.

The huge increase in production will make China more economically independent. But the country’s ability to hit the target is dependent upon harnessing technology which requires huge amounts of water. 

ODI estimates that, if successful, China’s imports of gas could be up to 40% lower in the future.  But this increase in home production could hit the economies of poorer countries who currently export gas.

Zhenbo Hou, a researcher into the growing BRICS nations at the ODI, said: “China has run a very successful shale gas pilot scheme.

“Starting from a low base they now seem on course to increase their production tenfold to between 60 and 100 billion cubic metres by 2020.

“This will make them less reliant on countries like Russia for energy in the future – so it is a very important geopolitical moment.

“Combined with the increase shale gas production in the USA it will hit the economy of small exporters in the developing world.”

This increased production could lead to smaller markets and lower incomes for poorer countries that export gas – like Yemen, Mozambique, Ghana, Republic of the Congo, Mauritania and Nigeria.

It is also not without risks within China itself, as it could divert water from agriculture and human consumption. The supply of water is likely to be more constrained in China than in the USA, which is also becoming energy self-sufficient thanks to fracking. 

America is set to overtake Saudi Arabia as the world’s biggest oil producer. This increased production by the world’s two economic superpowers – China and US - will lead to smaller markets and lower incomes to poorer countries that export gas, according to ODI. 

Ends

NOTE: Currently China produces very little shale gas, but production is expected to reach between 60 and 100 bcm by 2020, compared to an estimated 250 bcm imports of gas predicted in 2020 – from which it may be inferred that Chinese gas imports would by then have been around 30-40% higher in the absence of domestic production.