Jurisdiction - China
China – As State Pursues Shale, Africa At Risk Of ‘Trade Shock’, Report Warns.

19 May, 2014


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, according to a new report.

This increased production could lead to smaller markets and lower incomes for countries such as Ghana and Nigeria, said the report by the UK’s Overseas Development Institute (ODI) (42-page / 1.86 MB PDF).


In addition a larger number of countries such as Nigeria, Angola and Congo are exposed to a “potential trade shock” emerging from a change in US oil imports as fracking increases there, the report said.


Last year, the Chinese government announced a number of policies and incentives designed to “accelerate” the development of the country’s shale gas industry.


“As a result of fracking in the future, Chinese imports of gas could be 30-40% lower in 2020,” the ODI said. “An increase in fracking in China with the same size in the (US) trade shock would double the effect.”


In China’s 12th five-year plan (2011-15) the government set an ambitious production target of 6.5bn cubic metres (bcm) of shale gas productionby 2015, rising to possibly 60-100 bcm per year by 2020, and higher thereafter.


According to the ODI, 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% and Yemen 4%.


Last week, Nigeria’s petroleum resources minister Diezani Alison-Madueke reportedly called for Nigeria’s long-awaitedPetroleum Industry Bill, currently being considered by legislators, to be “broken up” to speed its passage through parliament.


The group managing director of the Nigerian National Petroleum Corporation warned earlier this month that maintaining the country’s position as a leading oil producer depended on lawmakers passing the bill, to “remove the uncertainty surrounding the future fiscal framework in the oil and gas sector”.


Pinsent Masons


For further information, please contact:


Richard Laudy, Partner, Pinsent Masons

[email protected]


Nick Ogden, Partner, Pinsent Masons

[email protected]



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