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To: LoneClone who wrote (82537)	4/5/2007 9:15:48 AM
From: LoneClone	Respond to of 206092

Natural Gas Supplies Only Sufficient for 1/3 of Installed Capacity By David Harman 04 Apr 2007 at 08:53 AM GMT-04:00 resourceinvestor.com SHANGHAI (Intefax-China) -- China’s natural gas supply has failed to keep up with the expansion of gas-fired power plants, leading to a significant waste of resources, said an expert with the China University of Petroleum at an industry conference in Beijing. "Only one-third of the installed capacity can be put into operation this year," according to Liu Yijun, a natural gas expert with the university. The university is a top industry research organization. According to Liu, China’s aggregated installed capacity of natural gas power plants requires an annual natural gas supply of 30 to 50 billion cubic metres (bcm), exceeding the resources available in the domestic market for power generation. "Though the government has put a limit on natural gas power project development, there has already been a good amount of investment capital injected into projects under construction, and [investors] are unlikely to reverse their plans," said Liu. China National Petroleum Corp., the country’s top oil and gas producer, produced a total of 44 bcm last year. In addition to power generation, residential and industrial demand for natural gas is also soaring, due to a runaway economy and the government’s campaign to increase its involvement in the country’s energy consumption, said Liu. China is not rich in natural gas resources. With reserves of 2.27 trillion cubic metres (tcm), it ranks 15th in the world. Russia's 47.57 tcm of gas reserves are the world’s largest. Today, China National Petroleum Corporation (CNPC), the parent of PetroChina Co Ltd (HK 0857), has set a 2007 natural gas output target of 54 bcm, up from 44.5 bcm in 2006. China raised citygate natural gas prices by 13.27%to 1.28 yuan per cubic metre in August 2005. Commentary Given China’s limited domestic resources, this new plant capacity was always going to rely upon increased import of natural gas. In the next decade, domestic reserves will be supplemented by expected imports of 60 to 80 bcm per year from Russia alone. When China’s substantial LNG import contracts are added into the equation, the over capacity scenario doesn't look so disturbing. © Interfax-China 2007. This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 10 free copies of this, please e-mail david.harman@interfax-news.com.

To: LoneClone who wrote (82537)	4/5/2007 2:51:26 PM
From: ChanceIs	Respond to of 206092

>>>repairing the damage wrought by the deregulation of the wholesale electric energy market. Fifteen years of deregulation have contributed significantly to the systematic neglect outlined in the preceding paragraphs. Ironically, though deregulation coincided with the dawn of the Digital Age, it effectively sacrificed reliability on the altar of profits.<<< I can't disagree more with the author. Some areas have experienced great improvements with dereg/restructuring. Others have floundered. No thoughtful person would consider what California did to be deregulation. One of the big pushes for restructuring was that the utilities had little incentive to upgrade or modernize. We are continuing to move towards more fluid wholesale markets. Certainly an enhanced grid requires shifting load and generation between parties. What difference can it make if they are merchant generators or traditional utilities. Under most restructuring regimes, the utilities sold their generation but retained ownership of transmission and distribution. Many of the utilities focused upon forming merchant generators by buying their peers older generation plants in different geographic regions. The correlation between selling generation assets and failing to maintain the transmission lines is not clear to me. The correlation between the utilities which owned the power lines, focusing upon developing merchant generation instead of line maintenance, and the failure of lines is abundantly clear.