Risk Assessment of China’s Natural Gas Importation: A Supply Chain Perspective

Long Zhang; Wuliyasu Bai

doi:10.1177/2158244020939912

Risk Assessment of China’s Natural Gas Importation: A Supply Chain Perspective

Zhang, Long; Bai, Wuliyasu 2020-07-08 00:00:00 With the rapid growth of China’s energy consumption and the great pressure on reduction of carbon emissions, natural gas is an increasingly valuable energy source for enhancing energy and environmental sustainability. To sustain external natural gas supply, China has constructed a series of gas pipelines and liquefied natural gas (LNG) terminals for the increasing gas importation. This article identified five gas corridors of China: Central Asia–China gas pipelines, Myanmar–China gas pipelines, Russia–China gas pipelines, Australia/Southeast Asia–China seaborne LNG shipment, and Middle East/North Africa–China seaborne LNG shipment. It then proposed a group of indicators that may influence the security of China’s external gas shipment from a supply chain perspective, and composed them into a Risk Index for assessing the corridors of China’s natural gas importation using the Fuzzy AHP and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) methods. The results indicate that (a) transport distance, geopolitical risk, and resource risk are the major obstacles for China’s natural gas importation; (b) China’s natural gas importation is experiencing a mid-level risk, and the gas pipelines from Central Asia, Myanmar, and Russia are the most secure gas corridors for China, while LNG shipment from Middle East and North Africa has the greatest risk index. (c) China’s diversification strategy has been successful, but a more balanced strategy is suggested to deal with the high gas dependence on Turkmenistan and Australia, as well as Russia when the cross-border gas pipelines are completed and fully utilized in the near future. Keywords risk assessment, natural gas importation, gas pipelines, LNG seaborne shipment, Fuzzy AHP-TOPSIS emissions compared with coal and oil (De Gouw et al., 2014; Introduction Gillessen et al., 2019; Shaikh & Ji, 2016), which made it an Throughout recent decades, China’s energy demand has important fuel alternative in policy circles (Gillessen et al., increased sharply, with total primary energy supply (TPES) 2019; Shaikh, Ji, Fan, Shaikh, et al., 2017). To increase rising from 1,609 million tons of oil equivalent (Moe) to energy and environmental sustainability, China has been 3,273.5 Moe between 2004 and 2018, whose share in world transiting to a more diversified energy mix, and turned to TPES grew from 14.7% to 23.6% (British Petroleum, 2019b). natural gas as a major alternative fuel since early 2000s Along with the explosive growth of energy consumption, (Leung et al., 2014). this country is experiencing growing dependence on external From 2000 to 2018, natural gas consumption in China supply of fuels (Yang et al., 2014), especially that its oil went up sharply from 24.5 bcm (billion cubic meters) to 283 import dependence climbed up from 30% in 2000 to 67% in bcm (British Petroleum, 2019b). To increase gas supply, 2017, and gas import dependence also went to 38% (British China has enlarged domestic gas production scale (Qin et al., Petroleum, 2019a). Compared with world energy mix, China 2018; Ren et al., 2015) from 27.2 bcm to 161.5 bcm (British has an excessive reliance on coal to sustain energy supply. Petroleum, 2019b). Thanks to these gas production incre- Historically, coal has dominated China’s energy mix with a ments, China has become the sixth largest gas producer and share of no less than 60%, while natural gas takes up a very small share of less than 6% before 2015 (National Bureau of Statistics of China, 2017; see Figure 1). 1 Xinyang Normal University, China China has promised to reduce greenhouse gas emissions Corresponding Author: to 60%–65% of the total for 2005 by the year 2030 (Cui Long Zhang, School of Business, Xinyang Normal University, No. 237 et al., 2014). As the cleanest conventional energy source, Nanhu Road, Xinyang 464000, China. natural gas has less CO and nearly zero NO and SO Email: hbzhanglong876@163.com 2 x 2 Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage). 2 SAGE Open Others Natural Gas Oil Coal Figure 1. Energy mix of China, 1952–2018. Source. China Energy Statistics Yearbook, British Petroleum (2019b). the third largest gas consumer of the world. Besides, it has low-carbon age (Liu et al., 2013; Mistré et al., 2018; also turned into a substantial player of international gas mar- Verbong et al., 2013). ket, who has been the largest gas importer of the world by the end of 2018 (British Petroleum, 2019b). Gas Reserves, Supply, and Demand of China China has already set a goal of no less than 10% of natural gas in TPES (National Development and Reform Commission China is scarce in natural gas resources. As the largest energy [NDRC] and National Energy Administration [NEA] of consumer of the word, it only owns 3.1% of world natural China, 2016), and it was projected that by 2040, China’s gas reserves, with proved natural gas reserves merely 6.1 tril- demand for natural gas would increase by 166% on 2017 lion cubic meters, ranking seventh in the world (British level, whose share in energy mix would double to 14%, and Petroleum, 2019b). In fact, gas fields are mainly located in the gas dependence would rise up to more than 43% (British western and northern regions of China, and three basins (the Petroleum, 2019a). To fill this expanding gap between Tarim Basin in Xinjiang, the Ordos Basin across Inner domestic gas supply and demand, it has to seek for a reliable Mongolia, Shaanxi and Ningxia, and the Sichuan Basin) and sustainable gas supply from external market. However, cover more than half of proven gas reserves of China the gas importation is a major challenge for the sustainable (Higashi, 2009). gas supply of China. How to protect its external gas supply Traditionally, natural gas did not play an important role from various kinds of risks has drawn intensive concern from in China’s energy supply until early 21st century, when its policy makers and energy experts. economy and energy demand grew at a surprising speed, and Therefore, this article describes the natural gas supply and it has to seek for alternative fuels to increase energy supply demand situation, and analyzes the five main corridors of and diversify its energy mix (see Figure 1). After that, natural gas importation in China. Then, from a perspective of China’s natural gas production and consumption increased supply chain, it identifies 11 risk indicators for evaluating the dramatically, and the gap between domestic gas supply and 5 corridors using the Fuzzy AHP and Technique for Order demand kept expanding, as shown in Figure 2. To fill this Preference by Similarity to Ideal Solution (TOPSIS) meth- gas, China has to seek for gas supply from the international ods. Finally, it draws some conclusions for this research and market. provides some policy implementations for ensuring the secu- During the past decade, China has imported natural gas rity of China’s natural gas importation. from about 30 countries, as shown in Table 1. While only half of them are the regular gas suppliers, who used to pro- vide natural gas to China more than 5 years. According to China’s Natural Gas Supply and Table 1, several features that label the evolution of China’s Demand natural gas import structure can be identified. First, the num- From a worldwide perspective, natural gas is also one of the ber of gas-importing sources was increasing steadily, and the main energy sources that drives world economy develop- geographical location of importing sources kept expanding, ment, with a share of more than 23.9% in world energy mix which means the diversification strategy of importing in 2018 (British Petroleum, 2019b). It is expected to sup- sources has shown very good effects. Second, China’s gas port the sustainable energy transition process (Gillessen dependence on Asian Pacific countries showed a decreasing et al., 2019) and remain the main energy source in the trend when the importing volume increased, and it is seeking 2018 Zhang and Bai 3 Production Consumption 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Figure 2. Production and consumption of natural gas in China (2003–2018). Source. British Petroleum (2019b). Table 1. Sources of China’s Natural Gas Importation, 2006–2018 (%). Country 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Turkmenistan 21.73 45.92 51.48 46.51 43.74 46.05 40.04 35.77 27.45 Uzbekistan 0.36 5.51 4.17 2.56 5.86 3.78 5.19 Kazakhstan 0.30 0.68 0.59 0.58 1.18 4.45 Qatar 7.24 10.15 10.32 16.35 17.76 15.71 10.86 9.20 10.92 10.47 Yemen 4.42 3.59 1.97 2.94 2.39 0.60 Oman 2.04 1.19 0.21 0.30 0.14 0.11 0.36 0.58 Egypt 5.46 0.49 0.79 0.96 1.12 0.28 0.12 0.08 0.25 Algeria 10.73 3.87 0.19 0.15 0.55 0.85 0.08 0.08 United Arab Emirates 0.54 Australia 100 85.05 81.47 63.31 32.83 16.12 11.69 9.34 8.90 12.49 22.17 25.20 26.46 Malaysia 0.26 11.85 9.92 6.96 6.08 6.98 6.99 7.34 4.79 6.15 6.51 Indonesia 9.73 14.25 8.80 7.94 6.39 5.96 6.47 5.16 4.47 3.05 Papua New Guinea 0.67 3.55 3.94 3.06 2.72 Brunei Darussalam 0.27 0.11 0.19 0.25 Singapore 0.22 0.33 Myanmar 0.41 5.14 6.51 5.29 3.67 2.39 Russian Federation 3.44 3.19 1.12 1.24 0.30 0.43 0.47 0.65 1.07 Equatorial Guinea 3.51 1.06 0.50 0.53 1.05 1.67 0.44 0.19 Nigeria 2.18 5.44 1.12 1.09 3.17 0.99 0.96 1.00 0.70 0.50 0.48 0.91 Angola 0.17 0.30 0.38 0.58 Trinidad and Tobago 1.05 0.41 1.45 0.54 0.28 0.26 0.13 0.21 0.17 0.41 Peru 0.63 0.46 0.10 0.08 United States of America 0.14 0.37 2.21 2.47 Norway 0.29 0.14 0.35 0.18 0.25 Netherlands 0.15 France 0.28 Source. Authors’ calculation based on data from UN Comtrade Database and British Petroleum (2019b). to acquire natural gas from a worldwide perspective. Third, Gas Infrastructure Central Asia has been a very important gas supplier since Since China’s gas suppliers are located all over the world, the 2010, when the Central Asia–China gas pipelines were con- gas freights must be transported to this country through dif- structed (Hu, 2014). Finally, pipeline gas gradually increases ferent routes. However, due to the special nature of natural its share in total gas imports, and China is ensuring its exter- gas in state, there are two kinds of transport carriers for natu- nal gas supply from both inland and seaborne routes (Hu, ral gas shipping: seaborne shipment for liquefied natural gas (LNG) and pipeline transport for gaseous natural gas. 2014; Leung et al., 2014). Trillion Cubic Meters 4 SAGE Open Table 2. List of China’s Existing LNG Terminals (As of Early 2018). Capacity Capacity Completion Location after phase 1 after phase 2 Main owners year Dapeng, Shenzhen, Guangdong 5.2 bcm/year 9.5 bcm/year CNOOC, BP 2006 Wuhaogou, Shanghai 0.7 bcm/year Shenergy 2008 Putian, Fujian 3.6 bcm/year 7 bcm/year CNOOC, Zhongmin Energy 2008 Yangshan Port, Shanghai 4.2 bcm/year 8.4 bcm/year CNOOC, Shenergy 2009 Dalian, Liaoning 4.2 bcm/year 8.4 bcm/year CNPC, Dalian Port 2011 Rudong, Jiangsu 4.8 bcm/year 8.7 bcm/year CNPC, Pacific Oil & Gas 2011 Ningbo, Zhejiang 4.2 bcm/year 8.4 bcm/year CNOOC, Zhejiang Energy 2012 Shennan, Hainan 1.4 bcm/year Jovo Energy 2012 Tangshan, Hebei 4.8 bcm/year 8.7 bcm/year CNPC, Beijing Enterprises 2013 Zhuhai, Guangdong 4.8 bcm/year 14 bcm/year CNOOC 2013 Tianjin 3.1 bcm/year 8.4 bcm/year CNOOC, Tianjin Port 2013 Qingdao, Shandong 4.2 bcm/year 7 bcm/year Sinopec 2014 Hainan 4.2 bcm/year CNOOC 2014 Diefu, Shenzhen, Guangdong 5.6 bcm/year CNOOC, Shenzhen Energy 2015 Beihai, Guangxi 4.2 bcm/year 8.4 bcm/year Sinopec 2016 Jieyang, Guangdong 2.8 bcm/year CNOOC 2017 Source. Authors’ calculation based on data from internet and academic articles. LNG = liquefied natural gas. Table 3. Schedule of LNG Project in China (As of Early 2018). Situation of LNG terminals Operation Expansion Completed Construction Approved Planning Suspended Number of LNG terminals 12 8 2 10 9 30 7 Source. Sun et al. (2016); Shan et al. (2016); LNG Industry Information (2018). LNG = liquefied natural gas. In the late 1990s, to deal with the shortage of energy sup- 40 to 45 LNG carriers every year if the LNG terminals are ply in the southeast provinces, the Chinese central govern- fully utilized (Liu, 2014). Presently, only a small part of ment approved the first LNG project (Lin et al., 2010). China’s LNG imports is carried by its own LNG carriers, Finally, China’s first LNG-receiving terminal was put into while most of the LNG freights have to rely on the charter operation in 2006 and received the first LNG cargo freight market (Zhang et al., 2016). from Australia (Tang, 2014). In fact, China has planned to Another mode for conveying gas imports is pipeline. build more than 15 LNG terminals when its first LNG termi- China has intended to construct gas pipelines to purchase nal was still in construction (see Table 2). However, due to Russia’s natural gas in the Far East since 1994 (Hao & Sun, the rapidly increasing energy price in international energy 2014). However, due to the policy changes of Russia in the market, only three terminals were put into operation before 21st century, the negotiations have been hindered by the dis- 2010 (ARA International Limited, 2015). After 2008, the putes on gas trade volume and price, pipeline distribution, global economic crisis led to decreasing energy price, which construction, and operation (Zhang & Bai, 2014). After stimulated China’s ambition on LNG importation and infra- nearly 20 years of negotiations, the gas deal between Russia structure construction. As of early 2018, 20 LNG terminals and China was finally signed in 2014, which would provide have been constructed, and 12 of them have been put into 38 bcm of natural gas to China every year from late 2019 operation, with a total annual capacity of 80 million tons, as by building a cross-border gas pipeline in Northeast China shown in Table 3. Besides, another six terminals and several (Dong et al., 2014; Koch-Weser & Murray, 2014). second-phase projects of existing terminals, about 21 million In fact, at the same time of gas negotiations with Russia, tons of capacity, are still in construction (LNG Industry China has paid great efforts and eventually reached agree- Information, 2018). ments with three Central Asian countries and Myanmar on To deliver the LNG freights to China, the first LNG car- cross-border gas pipelines. The Central Asia–China gas pipe- rier was put into operation in 2008. By 2014, China only lines were constructed based on Kazakhstan–China oil pipe- owns six LNG carriers, which were joint ventures between a lines, then connected with Uzbekistan and Turkmenistan Chinese shipping company and the BP Shipping (Liu, 2014). and were put into operation in 2010 (Fazilov & Chen, 2013; When estimated that one conventional LNG carrier can Hancock, 2006). By 2015, Line A, B, and C has already been deliver a million tons of LNG in 1 year, China needs at least completed, with a total annual gas capacity of 55 bcm (China Zhang and Bai 5 Table 4. Corridors of China’s Natural Gas Importation. Transport modes Routes Length (km) Capacity (bcm/year) Completion year Inland transport C : Central Asia–China gas Pipeline A 1833 15 2009 routes Pipeline B 1833 15 2009 Pipeline C 1830 25 2012 Pipeline D 1000 30 2024 C : Myanmar–China gas pipeline 2520 12 2012 C : Russia–China gas pipeline East Line 3,968 38 2019 Seaborne shipping C : Middle East/North Africa–Indian Ocean–Malacca 9,406 (from Doha – – routes Strait–South China Sea–China to Shanghai) C : Australia/Southeast Asia–South China 3,900 (from Darwin – – Sea–China to Shenzhen) Source. Authors’ calculation based on data from internet and academic articles. National Petroleum Corporation [CNPC], 2014). Besides, gas importation. In fact, the security of natural gas importa- the construction of Line D has also been initiated in 2014, tion has faced up with various potential risks caused by with a designed annual deliverability of 30 bcm, routed via human and nonhuman factors. Uzbekistan, Tajikistan, and Kyrgyzstan to China and was expected to be completed by the end of 2020 (CNPC, 2014). Literature Review The Myanmar–China gas pipelines were completed in 2013, which can transport gas produced in Myanmar to China With the increasing demand for natural gas in recent years, without the restriction of Malacca Strait (H. Zhao, 2012), the security and reliability of natural gas supply becomes an with an annual gas delivery capacity of 12 bcm (Shan et al., important issue of concern to the policy makers, especially 2016). for the European and East Asian countries, who are the main gas importers in international gas market. Scholars have done intensive work on the security and sustainability of Corridors of China’s Natural Gas Importation natural gas supply or these regions and states. Considered China’s gas imports will keep expanding in the Europe is the largest natural gas importer of the world, near future (Sandalow et al., 2018), the patency and security and European energy security issues concerning natural gas of corridors for gas importation is of great significance to its has drawn great attention from scholars and policy makers. energy security and sustainability. Therefore, it requires Stern (2002) analyzed factors concerning European natural China to construct diversified, reliable, and secure supply gas supply from a traditional perspective using four indica- pattern for the increasing natural gas imports. tors: import dependence, relationships with non-European According to China’s gas-importing sources and gas exporting countries, security policy in traditional and liberal- infrastructure distribution, several corridors for natural gas ized gas markets, and security arrangements in liberalized importation can be identified, as shown in Table 4. It can be markets. It is believed that long-term contracts and geopoliti- found that this country has established both inland and sea- cal considerations strongly affected European natural gas borne corridors to keep natural gas supply. For several years, supply (Percebois, 2008). Pavlović et al. (2018) proposed a Southeast Asia and Australia are the main sources of China’s robust composite index for measuring natural gas supply external gas supply. In particular, Australia used to be the security of Croatia, which included energy import depen- largest LNG supplier, who provided more than half of gas dency index, energy intensity, gross inland consumption, imports of this country before 2009. From 2010, the Central index of national economy dependence on natural gas, Asia–China gas pipelines and Myanmar–China pipeline Herfindahl–Hirschman Index, and Shannon–Wiener Index. were put into operation one after another, which undertook European Union is extremely relying on external gas sup- half of China’s gas imports, increased extra access to exter- ply, so disruption of natural gas supply highlights the threat nal gas supply and opened up a new door for China’s gas to energy security and sustainability. From the perspective of importation in the west. contract actions, contract prices and benefits, Abada and Massol (2011) investigated the impact of the uncertainty of natural gas supply disruptions using a static Cournot game Identified Risks for China’s Natural Gas model. Based on Monte-Carlo simulation, Praks et al. (2017) Importation assessed the reliability and vulnerability of European gas To secure China’s natural gas importation, it is necessary to transmission networks. Geopolitics and international rela- identify the possible risk factors for the corridors of natural tionships are importing factors leading to disruptions of gas 6 SAGE Open supply, which must be taken into consideration when assess- sector, refining, and reserve sectors. Shaikh et al. (2016b) and ing the security of European gas imports (Lochner & Shaikh, Ji, and Fan (2017) measured the sustainability and Dieckhöner, 2012). Using a Stackelberg game model, Grais security of China’s natural gas supply through an ecological and Zheng (1994) analyzed the impact of relationships network analysis. By constructing a mathematical program- among suppliers, transporters, and importers on the security ming model, which considered various aspects of energy of natural gas importation. Richter and Holz (2015) analyzed security: diversification, lower dependency, supplier export the impact of disruptions of natural gas supply from Russia capacity, minimizing the import cost, transport distance, and on European countries. It is found that increased deliveries political instability of the foreign natural gas suppliers, of Russian pipeline gas led to more political risk due to the Shaikh, Ji, Fan, Shaikh, et al. (2017) also analyzed the opti- increased dependence on one supplier, while importing more mal natural gas import scheme for China. Geng et al. (2017) LNG means more technical and financial risks (Eser et al., constructed a multiobjective optimization model by consid- 2019). So, it was crucial to improve infrastructure as quickly ering multiple risk factors: maritime transportation distances, as possible to ensure an adequate natural gas supply for all pirate attacks, economic risks of importation, exporting European Union member countries (Zeniewski & Bolado- countries’ political risks, and maritime transportation risks, Lavin, 2012). to stimulate the optimal LNG importation portfolio of China. In order to ensure security of natural gas supply in Europe, Using the same method, Zhang, Zhong, et al. (2017) consid- some researchers have assessed all kinds of risks for natural ered cost, country risk, shipping risk, and impact of extreme gas supply security. Weisser (2007) introduced several risks events, to analyze China’s LNG import. Kong et al. (2019) for European gas supply security, that is, source dependence, designed an evaluation framework with full consideration of transit dependence, facility dependence, structural risks, resource risk, political risk, transport risk, price volatility natural disaster, political blackmail, terrorism, war, and civil risk, purchasing power risk, and dependence risk, to evaluate unrest. Doukas et al. (2011) also identified seven risks on the the import risks of natural gas for China. security of European gas supply: conflicts, political instabil- These studies have evaluated the security or risks of natu- ity, terrorist attacks, export restriction, accidents, weather ral gas supply and importations in detail. However, some conditions, and monopolistic practices. Biresselioglu et al. problems still need further discussions. First, most of them (2012) constructed a multiobjective programming model, are conducted from a perspective of foreign dependence or which involved political, economic, and security risks for importing sources, very few of them have considered possi- analyzing Turkey’s LNG security policy. ble risks in the gas supply chain, and our study can be taken Asia-Pacific region is another area that is closely con- as a contribution to literature by summarizing the risk factors nected with international natural gas market for gas supply, from a supply chain perspective together with Pavlović et al. and no shortage of researches has been done to investigate (2018) and Kong et al. (2019). Second, few researches have the security of natural gas supply in this region. Jun et al. analyzed gas importation security by identifying corridors of (2009), Manuhutu and Owen (2010), and Vivoda (2014) gas supply and the associated risks. Finally, a lot of researches used the Herfindahl–Hirschman Index to assess the security focused on the overall security of gas importation, and and risks for Korea, China, and other major LNG-importing ignored the risks of individual suppliers or transport routes. countries in the Asia-Pacific region. Cabalu and Manuhutu (2009) examined the vulnerability of eight Asian gas-import- Risk Criteria for Corridors of China’s Natural Gas ing countries using Principal Component Analysis to analyze Importation four market risk indicators (cost of imported gas in national income, gas intensity, gas consumption per capita, and gas In order to evaluate the risks for corridors of China’s natural share in TPES) and two supply risk indicators (ratio of gas importation, we need to select the appropriate risk crite- domestic gas production to consumption and geopolitical ria. To do that, we firstly reviewed the possible criteria in the risk). Cabalu (2010) also proposed a gas supply security literature aimed at evaluating security and risks of natural index to evaluate security of natural gas supply in Asia with gas supply (see Table 5). Then, taking a perspective of natu- the indicators of gas intensity, net gas import dependency, ral gas supply chain, which consists of three stages: external ratio of domestic gas production to consumption, and geopo- dependence stage, transportation stages, and external supply litical risk. By employing the ecological network analysis, stages, we filtered and selected risk criteria for each stage. Shaikh et al. (2016a) assessed the security of natural gas sup- Finally, 11 risk indicators were identified (see Figure 3), plies in the Asia-Pacific region and found that diversification which were described more detailed in Table 6. can help improve natural gas supply security. As the largest gas consumer and importer in this region, I : Dependence risk. At the initial stage of natural gas impor- China has drawn a great deal of scholars to investigate its tation, dependence risk determined the amount of gas impor- natural gas supply. Lu et al. (2016) comprehensively evalu- tation as well as importer’s degree of dependence on the ated China’s natural gas supply security that integrated vari- exporters, which reflects the risks associated with the gas ous components, including supply sources, consumption exporters’ monopoly control over importer’s gas imports. Zhang and Bai 7 Table 5. Summary of Previous Research on Security and Risks of Natural Gas Supply. Authors Risk factors and variables Methods and models Grais and Zheng (1994) Relationships among suppliers, transporters, and importers Stackelberg game model Stern (2002) Import dependence, relationships with non-European Qualitative and descriptive analysis exporting countries, security policy in traditional and liberalized gas markets, and security arrangements in liberalized markets Weisser (2007) Source dependence, transit dependence, facility dependence, Qualitative and descriptive analysis structural risks, natural disaster, political blackmail, terrorism, war, and civil unrest Percebois (2008) Long-term contracts and geopolitical considerations in the Qualitative and descriptive analysis relationships with main suppliers Cabalu and Manuhutu (2009) Cost of imported gas in national income, gas intensity, gas An index derived by Simple consumption per capita, gas share in TPES, ratio of domestic Additive Weighting method, with gas production to consumption, and geopolitical risk the weight defined by Principal Component Analysis Jun et al. (2009) Herfindahl–Hirschman Index Qualitative and descriptive analysis Cabalu (2010) Gas intensity, net gas import dependency, ratio of domestic Gas supply security index derived gas production to consumption, and geopolitical risk by Root Mean Square method Manuhutu and Owen (2010) Herfindahl–Hirschman Index Qualitative and descriptive analysis Abada and Massol (2011) Uncertainty of natural gas supply disruptions Static Cournot game model Doukas et al. (2011) Conflicts, political instability, terrorist attacks, export Qualitative and descriptive analysis restriction, accidents, weather conditions, and monopolistic practices Biresselioglu et al. (2012) Political, economic, and security risks Multiobjective programming model Lochner and Dieckhöner (2012) Geopolitics and international relationships Linear optimization model Vivoda (2014) Herfindahl–Hirschman Index Qualitative and descriptive analysis Richter and Holz (2015) Disruptions of natural gas supply Global Gas Model Lu et al. (2016) Supply sources, consumption sector, refining, and reserve Network Information Analysis sectors in a system Geng et al. (2017) Maritime transportation distances, the risk of pirate attacks, Multiobjective optimisation model economic risks of importation, the exporting countries’ political risks and the maritime transportation risks Praks et al. (2017) Gas supply disruptions Monte-Carlo simulation Shaikh, Ji, Fan, Shaikh, et al. Diversification, lower dependency, supplier export capacity, Mathematical programming model (2017) minimizing the import cost, transport distance, and political instability associated with each of the foreign natural gas suppliers Zhang, Zhong, et al. (2017) Cost, country risk, shipping risk, and impact of extreme events Multiobjective optimisation model Pavlović et al. (2018) Energy import dependency index, energy intensity, gross An index derived by Simple inland consumption, index of national economy dependence Additive Weighting method, on natural gas, Herfindahl–Hirschman Index, and Shannon– with the weight defined by the Wiener Index authors Kong et al. (2019) Resource risk, political risk, transport risk, price volatility risk, An index derived by Simple purchasing power risk, and dependence risk Additive Weighting method, with the weight defined by two-phase data envelope analysis Note. TPES = total primary energy supply. This risk indicator is usually measured by the proportion such as meteorological and geological disasters, and pirate of the net gas imports of suppliers in the gas corridors in attacks, and pay higher prices for long-distance transport. importer’s total gas imports (Zhang et al., 2013). I : Risks from stakeholders. Since long-distance gas shipment I : Transport distance. Transport distance is a very important may pass through the territory of other countries or the choke- factor that affects the security of natural gas importation and points and some dangerous waters, which will pose additional transportation. With longer transport distance, the importer geopolitical risks. The most typical case is the Russia–Ukraine may have a higher probability of encountering various risks, gas crisis, which lead to the gas supply disruptions in South 8 SAGE Open Figure 3. Supply chain and risks for natural gas transport routes. Table 6. Indicators for the Risks of China’s Natural Gas Transport Routes. Risks Descriptions Data source Property Unit I : Dependence risk The proportion of net gas imports from suppliers in British Petroleum (2019b) – % this corridor in importer’s total gas imports I : Transport distance The average distance from the start to the destination Shan et al. (2016); – km of transport corridor SEA-DISTANCES.ORG I : Risks from stakeholders Number of countries, straits or seas in the Wang and Sang (2010); – / transportation corridor Zhao (2014) I : Transport independence Importer’s control over the transport carriers, e.g., Author’s calculation based + % share in ownership on project information I : Terrorist or pirate attacks Terrorist and pirate attacks in the transportation Global Terrorism Index and – / corridor Annual IMB Piracy Report I : Transport accidents Any form of unwilling accidents may happen during Expert judgments – / transport, e.g., tanker sinking, explosions, fire, and leaks I : Vulnerability to unexpected Supply interruption due to hurricanes, earthquakes, Expert judgments – / natural disasters temperature, and other physical phenomena I : Financial risk The average gas price in the transportation corridor UN Comtrade Database – USD/kg I : Resource risk The reserve to production ratio of gas suppliers in the British Petroleum (2019b) + Year transport corridor I : Relationship with exporting The political and economic relationship between Chinese embassies + / and transit countries trading parties can affect gas trade and transport I : Political stability of Political stability of importing sources can affect their World Bank + / exporters gas exporting capacity Source. Authors’ summarization based on risk factors in Table 5. Note. “–” indicates this is a cost-type indicator, which means smaller value represent better effect. “+” indicates benefit-type indicators, which means larger value represents better effect. IMB = International Maritime Bureau, UN = United Nations. Eastern Europe (Kovacevic, 2009; Larrabee, 2010). There- I : Transport independence. Transport carriers are important fore, it is necessary to consider the risks from stakeholders shipping media for natural gas shipment, and it determined along the corridors. importing country’s flexibility and capacity in natural gas Zhang and Bai 9 transportation, which can have a neglectable influence on the price is usually determined through a negotiation mechanism security of natural gas supply (Villada & Olaya, 2013). The (Dastan, 2018; Shnyakina & Sun, 2018). In fact, economic main transport carriers for natural gas are pipelines and cost can be a factor with great significance in gas negotiation LNG carriers. China only owns six LNG carriers, and five of and contract (Geng & Ji, 2014). The gas negotiation between them undertake the LNG conveyance from Australia and China and Russia lasted for 20 years, for which an important Southeast Asia to Guangdong and Fujian (REALIZE, 2018). reason is that they could not reach an agreement on gas price While, LNG imports of the eastern and northern coastal and the distribution of gas pipelines (Zhao, 2014). provinces mainly come from the Middle East, and the trans- port was carried mainly by leasing LNG carriers. According I : Resource risk. During the past year of 2018, global gas to the project materials, the Central Asia–China gas pipelines consumption has increased by 195 billion bcm, or 5.3% on were joint ventured by China and countries along them, and 2017 level, which is one of the fastest growth rates since China owns half ownership (Wang et al., 2014). Similarly, 1984 (British Petroleum, 2019b). With the continuously CNPC, one of China’s three biggest petroleum companies, increasing gas consumption and fierce gas market competi- has 50.9% of ownership and franchise of Myanmar–China tion, the availability and accessibility of gas resources may gas pipelines (Li et al., 2013). Although China will not have experience great challenges and threats (Kong et al., 2019). any ownership in the Russia–China gas pipelines in Russia, This risk indicator can be estimated by reserve to produc- it will provide a small part in the financial investment (China tion ratio of gas suppliers in the transport corridor (Kong News, 2014). et al., 2019). I : Terrorist or pirate attacks. The risk of terrorist and pirate I : Relationships with exporting and transit countries. Tradi- 5 10 attacks is another risk factor for cross-border and long- tionally, energy policy usually focuses on market liberaliza- distance gas transport. In recent years, terrorism goes to priv- tion, competition, and climate targets, while ignores the ilege due to the political changes around the world (Dingley, hindering effect of geopolitical logic, which can underplay 2016), and pirate attacks have also become an international the important economic, technical, and security challenges threat for marine transport, especially for goods shipments (Siddi, 2019). The economic and political relationship from Somalia to Indonesia (Acciaro & Serra, 2013; Murphy, between gas supplier and importer is of great significance to 2013). the stability of natural gas importation, as well as the rela- tionship with the transit countries (Shaffer, 2013). Therefore, I : Transport accidents. During the long-distance gas trans- energy has always been an import topic in China’s foreign port, any form of unwilling accidents may happen. No matter policy and affairs (Medeiros & Fravel, 2003; Ziegler, 2006). for LNG transport, or gas pipelines, accident such as explo- sions, fire and leaks are the potential risks that may threat the I : Political stability of exporters. The political changes of gas security of gas conveyance. By reviewing major global suppliers can also lead to instability and interruption of gas energy accidents, it is found that piped natural gases (PNGs) supply (Flouri et al., 2015; Shaffer, 2013). Especially that are exposed to a higher possibility of leakage, fire, and even most of world’s large energy suppliers are located in Middle explosion than LNG (Burgherr & Hirschberg, 2014; Montiel East, Africa, and Central America, which is vulnerable to et al., 1996; Sovacool, 2008), despite that natural gas has the political instability and military conflicts. lowest frequency of severe accidents involving fatalities among various fossil fuels (Hirschberg et al., 2004). Data and Methodology I : Vulnerability to unexpected natural disasters. Due to that gas Data Description pipelines and LNG shipping routes may go through different orographic and weather conditions, and these natural factors After determining the risk indicators for China’s corridors of may cause various natural disasters, such as hurricanes, natural gas importation, the data for the two seaborne LNG earthquakes, extreme temperature, and other physical phe- corridors and three pipeline corridors with respect to the 11 nomena, which may lead to the interruption of gas supply risk indicators are collected, as shown in Table 7. (Doukas et al., 2011). There is something about the data that need to be explained. First, the distance of gas pipelines counts in both I : Financial risk. The price formation mechanism of natural foreign and domestic pipelines that need to be newly con- gas is so complicated, especially for LNG, and a lot of fac- structed. While, when collecting the data for ownership over tors may lead to the variation of LNG prices. Usually, LNG these pipelines, only the pipelines in foreign countries are price is closely related to global oil market (Brown & Yucel, counted. Second, the distance of Middle East–China LNG 2008), which means is may experience greater price fluctua- transport route is calculated from Doha Port in Qatar to tions (Caldara et al., 2019; Yao & Kuang, 2019). While PNG Shanghai Port in China, while that of Australia/Southeast 10 SAGE Open Table 7. Data for Corridors of China’s Natural Gas Importation With Respect to the Indicators. Corridors I I I I I I I I I I I 1 2 3 4 5 6 7 8 9 10 11 C 25.4 1,833 6 50 2 5 2 0.28 152.3 8 0.08 C 2.4 2,520 2 50.9 2 7 6 0.47 67.4 6 −1.06 C 15.8 3,968 2 0 4 6 4 0.5 58.1 9 −0.84 C 11.4 9,406 6 3 10 5 10 0.44 96.9 6 1 C 39 3,900 3 18 8 2 6 0.37 27.7 6 1.29 Note. Price for LNG is calculated based on the data for 2017 from UN Comtrade Database, while the price for PNG is estimated based on the deal price. LNG = liquefied natural gas, UN = United Nations. Table 8. The Linguistic Terms and Corresponding Fuzzy Scales. Asia–China is calculated from Darwin Port in Australia to Shenzhen Port in China; the ownership over LNG carriers is Linguistic scales Triangular fuzzy scales also calculated based on the situation of LNG carriers and Equally important (E) (1, 1, 1) terminals. Third, when collecting the data with respect to ter- Weakly important (W) (2/3, 1, 2) rorist or pirate attacks (I ), transport accidents (I ), and vul- 5 6 Moderately important (M) (1, 3/2, 2) nerability to unexpected natural disasters (I ), relationships Fairly strongly important (F) (3/2, 2, 5/2) with exporting and transit countries (I ), these risk indica- Very strongly important (V) (2, 5/2, 3) tors are rated based on related reports and workshop discus- Absolutely important (A) (5/2, 3, 7/2) sions. Finally, since the Russia–China gas pipeline will not Reciprocals of these Reciprocals of the fuzzy numbers be in operation until 2020, the volume of PNG imported from Russia through this corridor is estimated by its capacity, Source. Ren and Sovacool (2014); Zhang et al. (2018). which almost equals to the PNG volume imported from Turkmenistan in 2018, so we will use this volume number to Methods measure the dependence risk. To assess the risk of China’s corridors of natural gas Fuzzy AHP. Fuzzy AHP is an effective way to determine the importation, 11 risk indicators have been selected. Obviously, weight of criteria and indicators (Ren & Lützen, 2015). this is a multiattribute decision-making problem with uncer- Before conducting Fuzzy AHP, a hierarchy structure model tainty and ambiguity (Zhang et al., 2018), and we need to should be developed to define the decision problem first. In determine the weight for the risk indicators, and derive a this article, the hierarchy model for the security of China’s composite risk index for the evaluation (Biresselioglu et al., natural gas importation is as shown in Figure 3. In this hier- 2012; Cabalu, 2010; Cabalu & Manuhutu, 2009; Geng et al., archy model, the top level defines the overall goal of this 2017; Kong et al., 2019; Lochner & Dieckhöner, 2012; assessment, which is the risk status of China’s natural gas Pavlović et al., 2018; Shaikh, Ji, & Fan, 2017; Zhang, Zhong, importation, the second level describes the three stages of et al., 2017). Multicriteria decision-making methods are China’s natural gas importation, and the bottom level identi- thought to be the most appropriate techniques for evaluating fies the specific risk indicators in each stage. the risks in energy supply and planning (Rostamzadeh et al., The procedure of fuzzy AHP is as follows: 2018). By taking the multicriteria decision-making methods, Step 1: Making pairwise comparisons for the indica- Ervural et al. (2018) used ANP and Fuzzy TOPSIS to analyze tors according to their relative importance with respect to Turkey’s energy planning. Liu and Wei (2018) also evaluate the upper-level factor using fuzzy numbers (as shown in the risks in electric vehicle charging infrastructure projects Table 8). using Fuzzy TOPSIS. Solangi et al. (2019) prioritized the Step 2: Establishing the comparison matrix based on pair- renewable energy sources in Pakistan with an integrated wise comparison in Step 1. Here we assume that a total of n Delphi-AHP and Fuzzy TOPSIS approach. criteria are included in the decision unit, with the criteria ith Therefore, we also used a hybrid multicriteria decision- represented by C . Then, the fuzzy comparison matrix can be making model to evaluate the risks of China’s five corridors obtained as shown follows: of natural gas importation. In detail, Fuzzy AHP was usually used to determine the weight of indicators (Hwang & Yoon, mm m mm m 1 1 12 11 jn 12 11 jn 1981; Zhang, Yu, et al., 2017), and the method of TOPSIS mm m mm m was utilized to rank or prioritize the alternatives (Azimi 21 1 22 jn 11 12 22 jn M = = et al., 2011; Ren & Lützen, 2015). Here in our research, these (1) mm m mm m 1 11 1 ii 12 in 12 jj in two methods would be combined to assess the risk status of mm m mm m 1 11 111 China’s five corridors of natural gas importation. nn 12 nj 12 nn in Zhang and Bai 11 L M U mm = (,mm ,) where is the triangular fuzzy number, where kn = 12 ,,, and k ≠ i. ij ij ij ij L U M Assume that ′ , then the weight vec- m dC () =≥ min( VS S ) m , m , and represents the lowest possible value, most ii k ij ij ij tor for the n criteria can be defined by Equation (8). possible value, and highest possible value, respectively. Step 3: Computing the value of fuzzy synthetic extent (8) ith ′ ′′ ′ with respect to the criterion, which is defined as Wd = () Cd ,(Cd ), ..., () C () 12 n −1 n n n Step 6: Normalizing the weight vectors, which is    (2) Sm =⊗ m ∑ ij ∑∑ ij   T T j =1  i=1 j =1  Wd == () Cd ,(Cd ), ..., () Cw ,, ww ..., (9) () () 12 n 12 n where where n n n n   L M U ′′ dC () = dC () /( dC ) (10) ii i i=1 mm == ,, mm ,, ij 12 ,,…, n (3) ∑∑ ij ∑ ∑  ij ij ij  j == 11  j =1 j j =1  TOPSIS. TOPSIS prioritizes the alternatives by relying on the −1 11 1   Euclidean distance between the evaluation objects and the n n ,,   n n n n n n    positive or negative ideal solutions, and the procedure of (4) m = ij ∑∑ L M U   mm m  ∑∑ ∑ ∑ ∑∑  ij ij ijj conducting TOPSIS is as following:  i =1 j =1   i == 11 j =1 i =1 j i =1 j =1  Step 1: To facilitate the aggregation of these indicators, it is necessary to perform data normalization. The benefit-type L M U Noting that SS = (,SS ,) is the value of the fuzzy ii i i indicators should be normalized by Equation (11), and the L M synthetic extent with respect to the ith criterion, , S , and i i cost-type indicators should be normalized by Equation (12). S S are the three element of the triangular number of . i i Step 3: Calculating the degree of possibility of xx − min ij j L M U L M U p = SS =≥ (, SS ,) SS = (, SS ,) by Equation (5). (11) ij ii i i jj j j maxm xx − in jj M M  1 SS ≥ i j max xx − jij  L U p = (12) 0 SS ≥ ij j i maxm xx − in jj L U p =≥ VS () S = SS −  (5) ij ij j i where p is the normalized value of the ith gas transport cor- oth herwise ij M U () SS −− ridor with respect to the jth indicator, x represents the origi- i i ij nal value of the ith gas transport corridor with respect to the M L () SS −  j j jth indicator, and max x and min x are the maximum and j j minimum value of the corridors of China’s gas importation Step 4: Determining the possibility matrix, which is used with respect to the jth indicator. to describe the relative significance of each pair of criteria Step 2: Computing the weighted normalized decision using the corresponding value of their fuzzy synthetic extent matrix , in which Zz = () ij mn × as shown in Equation (6). zw =* p (13) ij jij   / pp p 12 11 jn Step 3: Selecting the maximum and minimum x′ for each ij   pp / p 21 22 jn indicator in matrix Z, then the positive and negative ideal P = (6) + − solutions, Z and Z can be acquired.   pp / p j ii 12 in + − Step 4: Calculating d and d , the Euclidean distances   pp p / between the evaluating objects and the ideal solutions by nn 12 nj Equations (14) and (15). Step 5: Obtaining the degree of possibility for the fuzzy synthetic extent with respect to each criterion to be greater n (14) ++ 2 than that for all the other criteria. For instance, the degree of dz =− () z iijj possibility for the fuzzy synthetic extent with respect the ith j=1 criterion is greater than that with respect to all the other cri- teria can be defined as follows: −− 2 (15) dz =− () z iijj VS (, ≥= SS ,,  SS ,, )( VS ≥ S ) and ik 12 ni 1 j=1 VS () ≥ SV and ... and (S ≥≥ S ) ii 2 n Step 5: Obtaining the proximity of the evaluating objects (7) to the ideal solutions according to Equation (16), and the =≥ min( VS S ) ik 12 SAGE Open smaller value of the proximity indicates better performance. presented in Table 7 and Figure 3, we use linguistic terms In this article, the proximity value represents the closeness of and the corresponding fuzzy numbers (see Table 8) to make the alternative to the positive ideal solution, and the greater pairwise comparisons for the three stages of natural gas value means further distance from the positive ideal solution, importation as well as the risk indicators in each stage which can also be seen as higher risks. Therefore, we use this through a workshop discussion based on literature review proximity value as the Risk Index of China’s corridors of and judgment of expert group on the topic (Ren & Sovacool, natural gas importation, which is within the range of 0 to 1. 2014). The fuzzy judgment matrix with respect to the overall goal and the three stages are as following: (16) RI == C i (, 111 ,) (, 25 12,) 23 (, 12 23,) 1 +−   dd + ii   A = (, 32 25 ,) 2 (, 111 ,) (, 13 22 ,)    (, 13 2, 2 21 )( 22 ,, 31)(111 ,, )  Analysis and Results   With the indicators and their data with respect to the risk indicators of China’s corridors of natural gas importation A = (, 111 ,) [] (, 111 ,) () 1,32,2 () 52,3, 72 () 1,32,2 () 2,52,3 () 32,2,52     (12, 23,,12 )(111 ,, )( ,, 52 31 )( ,, 32 2)(32,2,52)(1,32,2)     () 27 ,, 13 25 (1/3,, 25,1/2, )(111 ,, )(12 23,1)(12,1,32)(12,1,32) A =   () 12,, 23 1, (12 23,,11 )( ,, 32 21 )(111 ,, )( ,, 32 2)(23,1,2)     () 13,, 25 12 () 25,, 12 23 (23,,1,2)(12,, 23 1, )(111 ,, )(12 23,1)   () 25,, 12 23 () 12,, 23 1 () 23,1,2 (() 12,1,32 () 1,32,2 (, 111 ,)      (, 111 ,) (, 25 12,) 23 (, 23 12 ,) (, 12 23,) 1    () 32,2,52 (, 111 ,) (2,52,,3)(23,, 12)   A =   () 12,1,32 (, 13 25,) 12 (, 111 ,) (, 25 12,) 23   () 1,32,2 (1 2 23 ,1,32)( 2,2,52)(111 ,, )   LU MU In order to help understand the process of Fuzzy AHP, we possibility of p == VS () ≥ S () SS −− /(() SS 12 12 21 11 took the weight calculation of the three stages as an ML −− () SS )( =− 0.. 2877 0 3376)/ ((0.. 2203−− 0 3376)(0.4576 example. . Similarly, we can derive all the value of −= 0.) 2877 ) 0.1737 The pairwise comparison of the three stages is shown in SS ≥ , and obtain the possibility matrix by Equation (6), ij the fuzzy judgment matrix A. Then the value of fuzzy syn- /. 0 1737 0.5650 thetic extent with respect to the three stages can be derived   by Equations (2) to (4) as follows:   = 1./ 0000 1.0000 where P .   S =⊗ (. 1 9000,. 2 1667,. 2 6667) 1.. 0000 0 6172 /     (. 112 1667,. 19 8333,. 17 9000) According to Equations (7) and (8), the weight vector can W = (. 0 1737,. 1 0000,. 0 6172) be determined as , which can = (. 0156 62,. 0 2203,. 0 3376) be normalized by Equation (9), and the final weight vector S =⊗ (. 3 5000,. 4 5000,. 5 5000) for the three stages is ′ . W = (. 0 0970,. 0 5584,. 0 3446) Taking the same procedure, the weight vector of the risk (. 112 1667,. 19 8333,. 17 9000) indicators with respect to the three stages can also be deter- = (. 0287 77,. 0 4576,. 0 6962) mined. Then, the global weight of each risk indicators can be derived, as shown in Table 9. S =⊗ (. 2 5000,. 3 1667,. 4 0000) With the global weight of indicators determined, we can (. 112 1667,. 19 8333,. 17 9000) apply the method of TOPSIS to conduct the risk assessment of China’s corridors of natural gas importation. By Equations = (. 0205 55,. 0 3220,. 0 5063) (11) to (13), the weighted normalized decision matrix as well SS ≥ Then, the value of possibility of , namely p , can as the positive and negative ideal solutions can be derived, as ij ij be determined by Equation (5). For instance, the degree of listed in Table 10. With Equations (14) to (16), the positive Zhang and Bai 13 Table 9. The Weight of the Risk Indicators Derived by Fuzzy AHP. Stages of gas importation and weights Risk indicators Local weight Global weight External dependence stage 0.0970 I 1 0.0970 Transport stage 0.5584 I 0.3259 0.1820 I 0.2557 0.1428 I 0.0418 0.0233 I 0.1574 0.0879 I 0.0531 0.0297 I 0.1661 0.0928 External supply stage 0.3446 I 0.1611 0.0555 I 0.4145 0.1428 I 0.0774 0.0267 I 0.3470 0.1196 AHP = analytic hierarchy process. Table 10. Weighted Normalized Decision Matrix and the Positive/Negative Ideal Solutions. Corridors and ideal solutions I I I I I I I I I I I 1 2 3 4 5 6 7 8 9 10 11 C 0.0610 0.0000 0.1428 0.0229 0.0000 0.0178 0.0000 0.0000 0.1428 0.0178 0.0580 C 0.0000 0.0165 0.0000 0.0233 0.0000 0.0297 0.0464 0.0479 0.0455 0.0000 0.0000 C 0.0355 0.0513 0.0000 0.0000 0.0220 0.0237 0.0232 0.0555 0.0348 0.0267 0.0112 C 0.0239 0.1820 0.1428 0.0014 0.0879 0.0178 0.0928 0.0404 0.0793 0.0000 0.1048 C 0.0970 0.0497 0.0357 0.0083 0.0659 0.0000 0.0464 0.0227 0.0000 0.0000 0.1196 Z 0.0970 0.1820 0.1428 0.0233 0.0879 0.0297 0.0928 0.0555 0.1428 0.0267 0.1196 Z 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 Table 11. Positive and Negative Euclidean Distances and the C5: Australia/ Southeast Asia- China Proximity of Each Corridor. C4: Middle East/ North Africa- China Parameters C C C C C 1 2 3 4 5 C3: Russia- China i 0.1682 0.1734 0.1803 0.2789 0.2037 − C2: Myanmar- China 0.2803 0.2641 0.2292 0.1517 0.2189 C 0.3750 0.3964 0.4403 0.6478 0.4820 C1: Central Asia- China 0.00 0.20 0.40 0.60 0.80 1.00 and negative Euclidean distances can be calculated, as well Figure 4. Risk Index of China’s corridors of natural gas as the proximity of each corridor to the ideal solutions, and importation. the results were presented in Table 11. As mentioned previously, the Risk Index of China’s cor- ridors of natural gas importation can be represented by the shipping route from Australia and Southeast Asia has a proximity value of each alternative. Therefore, we have medium security level with a Risk Index of 0.48. derived the Risk Index of China’s five corridors of natural Central Asia–China gas pipelines are the most reliable gas gas importation, and the results were presented in Figure 4. It import corridor for China, with a Risk Index of 0.3750. indicates a mid-level security for China’s natural gas impor- Central Asia is among the largest natural gas producers and tation, with an average Risk Index of no more than 0.47. To exporters of the world. In fact, Turkmenistan, Kazakhstan, be specific, the gas pipelines from Central Asia are the most and Uzbekistan, three major Central Asia Countries, are secure and reliable natural gas import routes for this country, home to more than 20 trillion cubic meters of proved gas followed by the gas pipelines from Myanmar and Russia. reserves, which almost equals that in Qatar, and six time of Comparatively, China’s seaborne LNG corridors seem to that in China. The relationship between Central Asia and be riskier than inland corridors of natural gas pipelines. China can date back to the Silk Road that established about Especially, the seaborne LNG corridor from Middle East and 2000 years ago (Christian, 2000). In modern time, China has North Africa is experiencing a Risk Index of 0.65, which is established diplomatic relationships with Central Asian much higher than other corridors, while the seaborne LNG countries when the Soviet Union collapsed in the 1990s. 14 SAGE Open After that, China kept and enlarged its cooperation with them southwest China, which makes the pipelines more expensive in economic integration and fight against separatism, terror- and vulnerable to storms, landslides, and earthquakes (W. D. ism, and extremism (Chung, 2004; Wu & Chen, 2004). China Wang et al., 2009). has built oil pipelines from Kazakhstan in 2006, whose Russia can be a reliable gas supplier for China, with a capacity has been expanded in 2009 (Liao, 2006). However, Risk index of 0.4403. Russia has been proved to be home to China did not stop paying efforts in “energy diplomacy” the richest natural gas reserves and the largest natural gas within this region, and planned to establish four gas pipelines exporter of the world. In fact, China has planned to establish to connect the gas fields in Turkmenistan with gas pipeline gas pipelines from Russia to China since 1990s. However, networks in China, which can deliver at most 85 bcm of nat- their negotiation on the route and price has never reached an ural gas to China every year. Since the Central Asia–China agreement until 2014, when CNPC, the largest oil and gas gas pipelines in this region are half owned by China, which company in China, signed a 30-year, 400 billion USD and can help to keep a close economic and political relationship, annual 38 bcm of natural gas deal with Russian energy giant, this corridor is considered to contribute the most to China’s Gazprom (Weitz, 2014). To complete the gas delivery, Russia energy security. However, this gas import corridor also con- will build a gas pipeline, named Power of Siberia, from its fronts several barriers. First, the main gas supplier in this Kovyktin and Chayandin fields in eastern Siberia to the east- region, Turkmenistan, is far away from China, and the gas ern Sino-Russian border, about 1800 km (Koch-Weser & pipelines have to go through almost the five countries in this Murray, 2014). China will extend it through northeast China region, which increases the financial risks in pipeline con- to the Beijing–Tianjin–Hebei metropolitan area in the north struction and transit fees (Sovacool, 2009). Second, this of China and the Yangtze River Delta in the east (Weitz, region, together with Xinjiang Uygur Autonomous Region 2014). This is a reliable gas import corridor, because it does of China, is facing risks from separatists and Turkism, which not involve the third party, and these two countries kept a may affect the transport security of natural gas along the tight economic and political communication and peaceful pipelines (Kerr & Laura, 2008). borders in recent decades (Hitt et al., 2004). The shortages The Myanmar–China pipeline is built to open China’s for this corridor lie in two points. First, more than 3,000 km access to natural gas import from the southwest, and the of pipelines need to be newly established, and most of them analysis indicates that this is a gas import corridor with mod- will go through the freezing cold Siberia, where frozen soil erate proximity value at 0.3964. This gas corridor has some and low temperature may have some influence on the secu- advantages that distinguish it from other gas pipelines of rity of gas pipelines and shipment. Second, compared with China. First, China has invested on both gas fields’ produc- other cross-border gas pipelines, China does not have any tion and pipelines construction in Myanmar, which means ownership over the pipelines in Russia, which may make it China has ownership over these assets, which can protect gas compromise to Russia in the future gas negotiations. supply in this region. Second, this corridor goes through As to seaborne LNG imports, Australia, Malaysia, and Myanmar to China directly without passing through the third Indonesia used to be China’s main gas suppliers before it country or region, which means less diplomatic and eco- imported pipeline gas from Central Asia. In fact, these three nomic risks. However, after several years of operation, this countries are also among the largest LNG exporters of the pipeline is criticized for its high costs and political risks in world. Compared with other LNG exporters, they have ade- Myanmar. On one hand, the gas fields in Myanmar cannot quate LNG that can be shipped to China by traveling a much keep a stable and sufficient gas production due to its political shorter distance. The shortest distance between China instability and poor economic conditions (Li et al., 2013), Mainland and Australia is about 3,900 km, from the Darwin and the gas price is about 70% higher than that from Port in the northern Australia to Shenzhen Port in Southeast Turkmenistan. On the other hand, the other end of gas pipe- China. Another advantage is that these counties have a very lines is the Southwest China, where natural gas infrastruc- close economic relationship with China. In fact, according to tures and market is really insufficient (Jiang, 2014; Zhai, data from UN Comtrade, China has become their largest 2014). However, the biggest threat is still the political risks business partner during the past several years, and the close in Myanmar. China has signed the gas contract with the for- economic communication can enhance their cooperation in mer military government in Myanmar at the dawn of 21st LNG trade. The risks of this corridor mainly come from geo- century. However, when the national power was transferred politics. Although it does not need to pass through the to the new government in 2010, several projects invested by Malacca Strait, the territorial disputes in South China Sea in foreign companies were shelved by the new president, recent years may produce some influence on the security of including the Myitsone hydropower project (Y. Sun, 2012; freight shipment in this area (BBC, 2016). Besides, as one of Turnell, 2011). Besides, the gas fields and docks can be the world’s busiest international trade routes, South China influenced by local religious conflicts, and the pipelines have Sea and the waters near Indonesia and Philippines are also to go across the northern part of Myanmar, which is still in the most dangerous seas of the world with large amount of civil war (Y. Sun, 2012). Another potential risk for this cor- pirate attacks (Acharya et al., 2015; Graham, 2015). In addi- ridor is that the pipelines must go through the mountains in tion, storms, hurricanes, and running around in the ocean can Zhang and Bai 15 also bring great potential risks to the security of seaborne economic influence, but cannot exert crucial influence on LNG transport (Dillon, 2015). regional political conflicts, although it has paid great efforts Compared with other corridors of natural gas importation, on keeping regional peace, managing conflicts, and seeking the route of LNG shipment from Middle East and North regional security (Chaziza, 2018). Africa to China is the least secure one, mainly due to the long Second, a relative secure situation has been observed for shipping distance. The long transport distance has caused China’s natural gas importation, and the pipeline gas corri- several barriers to the security of natural gas importation and dors are more secure and reliable access for China to convey shipment. The first one is high shipping costs. For example, its natural gas importation than the seaborne LNG shipment. the average landed prices of China’s importing LNG from To be specific, Central Asia–China gas pipelines are thought Australia and Qatar are 0.19 and 0.93 USD/kg, respectively. to be the most reliable and secure corridor for natural gas However, since LNG price is linked to international crude oil importation of China, and the close political and economic market, it is obvious that the huge difference in final costs is relationships between them also enhanced its role in ensur- caused by the shipping and insurance costs (Maxwell & Zhu, ing China’s natural gas importation. The construction of 2011). Second, the long shipping distance means passing Myanmar–China gas pipelines is more like a strategic con- through more transit countries and dangerous waters, and sideration, which can provide China another access to exter- made it more vulnerable to offshore natural disasters. Third, nal energy supply with much shorter transport distance. the Middle East and North Africa is confronted with great However, due to the instability of gas production and geo- geopolitical risks, and the Somali piracy along this route has graphical barriers, this corridor is challenged and questioned brought additional risks (Caldara & Iacoviello, 2016; Malik, by the high gas price and limited gas delivery. The Russia– 2015). Finally, China’s gas companies only own a small China gas pipelines has experienced a long and difficult number of LNG carriers, and most of them are used to deliver negotiation and are expected to deliver gas from late 2019, LNG imports in Asian Pacific regions (China Daily, 2018), then reaching full capacity of 38 bcm by 2025. Russia owns so the LNG shipment from Middle East has to rent foreign about 20% of global natural gas reserves and could be a reli- LNG carriers, which brings extra expenses and risks from able and stable gas supplier of China, while the low tempera- supply disruption. ture and frozen soil brings potential risks to the construction and operation of gas pipelines. The LNG corridor from Australia, Indonesia, and Malaysia can provide China with Conclusions and Discussions large amount of affordable LNG through a relatively short Many risks and factors may affect the security of China’s shipping route. While, the biggest threat to this corridor is corridors of natural gas importation. In this article, it intro- the potential geopolitical conflicts and piracy attacks in duced the situation and trends of China’s natural gas con- South China Sea and nearby waters. Another seaborne cor- sumption and importation, and identified five main corridors ridor, the LNG shipping route from Middle East and North of China’s gas importation. Then, from a perspective of natu- Africa to China has the worst security performance due to ral gas supply chain, it divided the process of natural gas the long shipping distance and complex geopolitical factors importation into three stages: external dependence stage, in Persian Gulf and South China Sea as well as the rampant transport stage, and external supply stage, and proposed 11 piracy attacks. indicators that reflect the potential risks in China’s natural In addition, the diversification strategy of China’s energy gas importation. After that, it aggregated these indicators policy has been proved successful. The importation of natural into a Risk Index for evaluating China’s five corridors of gas in China started from 2006, with a gas import volume of natural gas importation with the hybrid model of Fuzzy AHP 1 bcm, which has grown up to 121.3 bcm by 2018, and made and TOPSIS. From which, we can draw some conclusions. China the largest natural gas–importing country of the world First, among these risk indicators, transport distance is the (British Petroleum, 2019b). With the rapid growth of natural major obstacle for China to enhance its reliable and sustain- gas imports, more countries have been listed as external gas able natural gas importation, followed by risk from stake- suppliers of China (as shown in Table 1), and gas supply holders, resources risk, and political stability of gas suppliers. structure has become more diversified. However, it seems While, transport independence and financial cost seem to that China is overwhelmingly dependent on the gas supply have limited influence on the risks of China’s natural gas from Turkmenistan and Australia, which accounts for more importation. To reduce this risks of China’s natural gas than 55% of China’s total gas imports. With the comple- importation effectively, regional political and economic tion and operation of Russia–China gas pipelines and Line cooperation is needed for China to build a friendly environ- D of Central Asia–China gas pipelines in the near future, ment to acquire natural gas from Central Asia and Southeast Turkmenistan, Russia, and Australia are expected to provide Asia under the initiative of Belt and Road (Huang, 2016; over 75% of gas imports of China. Therefore, a balanced Summers, 2016), and the Central Asia gas pipelines are one strategy is suggested to help reduce the risks of China’s exter- of the main achievements of this initiative. However, in nal gas supply. There are also some other sources that provide Middle East and North Africa, China has proved its natural gas to China, that is, Equatorial Guinea, Nigeria, and 16 SAGE Open Angola in eastern Africa, and Trinidad and Tobago in Latin supply and lack of peaking–shaving capacity of China’s natu- America. However, these sources faced up with great risks in ral gas supply network in winter. Therefore, it is really a top transport distance, political instability, resource endowment, priority for China to complete its domestic gas pipeline net- geopolitical risks, and other risk aspects. works and the gas storage infrastructures. To open up new gas corridor, China turned to the Arctic Acknowledgments Ocean for gas acquisition. A geological-based assessment of the Arctic Circle conducted by the U.S. Geological Survey The authors are grateful to editors and anonymous referees for their indicates that about 30% of the world’s undiscovered gas and very valuable comments and suggestions, which have significantly helped improve the quality of this paper. 13% of undiscovered oil may be found there (Gautier et al., 2009). With global warming, resource exploitation in Arctic Declaration of Conflicting Interests regions become economically and technically feasible, and The author(s) declared no potential conflicts of interest with respect the Arctic sea lanes opening up for longer and longer periods to the research, authorship, and/or publication of this article. each year. In 2018, the first LNG cargo has been shipped to China from Yamal LNG project Russian Arctic region via the Funding Northern Sea Route (Duran, 2018). Which means China has The author(s) disclosed receipt of the following financial support opened up a new gas corridor from Europe and the Arctic, for the research, authorship, and/or publication of this article: which can deliver the LNG imports from Norway and other This research was funded by the Key R&D and Promotion Project Arctic LNG projects to China more efficiently. Although this (Soft Science Research) in Henan Province, China (grant no. LNG corridor has short transport distance, resource abun- 202400410068), the tendering project of Government Decision- dance, no threat from piracy attacks, and less geopolitical Making Research in Henan Province (grant no. 2018B132), the risks, it is still criticized for lack of infrastructure, harsh natu- Key Scientific Research Project of Colleges and Universities in ral environment, and threats from the floating ices and ice- Henan Province, China (grant no. 19A790020), and the Nanhu bergs (Borch et al., 2016; Ghosh & Rubly, 2015). 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Publisher: SAGE
Copyright: © The Author(s) 2020
ISSN: 2158-2440
eISSN: 2158-2440
DOI: 10.1177/2158244020939912
Publisher site: See Article on Publisher Site

Abstract

With the rapid growth of China’s energy consumption and the great pressure on reduction of carbon emissions, natural gas is an increasingly valuable energy source for enhancing energy and environmental sustainability. To sustain external natural gas supply, China has constructed a series of gas pipelines and liquefied natural gas (LNG) terminals for the increasing gas importation. This article identified five gas corridors of China: Central Asia–China gas pipelines, Myanmar–China gas pipelines, Russia–China gas pipelines, Australia/Southeast Asia–China seaborne LNG shipment, and Middle East/North Africa–China seaborne LNG shipment. It then proposed a group of indicators that may influence the security of China’s external gas shipment from a supply chain perspective, and composed them into a Risk Index for assessing the corridors of China’s natural gas importation using the Fuzzy AHP and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) methods. The results indicate that (a) transport distance, geopolitical risk, and resource risk are the major obstacles for China’s natural gas importation; (b) China’s natural gas importation is experiencing a mid-level risk, and the gas pipelines from Central Asia, Myanmar, and Russia are the most secure gas corridors for China, while LNG shipment from Middle East and North Africa has the greatest risk index. (c) China’s diversification strategy has been successful, but a more balanced strategy is suggested to deal with the high gas dependence on Turkmenistan and Australia, as well as Russia when the cross-border gas pipelines are completed and fully utilized in the near future. Keywords risk assessment, natural gas importation, gas pipelines, LNG seaborne shipment, Fuzzy AHP-TOPSIS emissions compared with coal and oil (De Gouw et al., 2014; Introduction Gillessen et al., 2019; Shaikh & Ji, 2016), which made it an Throughout recent decades, China’s energy demand has important fuel alternative in policy circles (Gillessen et al., increased sharply, with total primary energy supply (TPES) 2019; Shaikh, Ji, Fan, Shaikh, et al., 2017). To increase rising from 1,609 million tons of oil equivalent (Moe) to energy and environmental sustainability, China has been 3,273.5 Moe between 2004 and 2018, whose share in world transiting to a more diversified energy mix, and turned to TPES grew from 14.7% to 23.6% (British Petroleum, 2019b). natural gas as a major alternative fuel since early 2000s Along with the explosive growth of energy consumption, (Leung et al., 2014). this country is experiencing growing dependence on external From 2000 to 2018, natural gas consumption in China supply of fuels (Yang et al., 2014), especially that its oil went up sharply from 24.5 bcm (billion cubic meters) to 283 import dependence climbed up from 30% in 2000 to 67% in bcm (British Petroleum, 2019b). To increase gas supply, 2017, and gas import dependence also went to 38% (British China has enlarged domestic gas production scale (Qin et al., Petroleum, 2019a). Compared with world energy mix, China 2018; Ren et al., 2015) from 27.2 bcm to 161.5 bcm (British has an excessive reliance on coal to sustain energy supply. Petroleum, 2019b). Thanks to these gas production incre- Historically, coal has dominated China’s energy mix with a ments, China has become the sixth largest gas producer and share of no less than 60%, while natural gas takes up a very small share of less than 6% before 2015 (National Bureau of Statistics of China, 2017; see Figure 1). 1 Xinyang Normal University, China China has promised to reduce greenhouse gas emissions Corresponding Author: to 60%–65% of the total for 2005 by the year 2030 (Cui Long Zhang, School of Business, Xinyang Normal University, No. 237 et al., 2014). As the cleanest conventional energy source, Nanhu Road, Xinyang 464000, China. natural gas has less CO and nearly zero NO and SO Email: hbzhanglong876@163.com 2 x 2 Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage). 2 SAGE Open Others Natural Gas Oil Coal Figure 1. Energy mix of China, 1952–2018. Source. China Energy Statistics Yearbook, British Petroleum (2019b). the third largest gas consumer of the world. Besides, it has low-carbon age (Liu et al., 2013; Mistré et al., 2018; also turned into a substantial player of international gas mar- Verbong et al., 2013). ket, who has been the largest gas importer of the world by the end of 2018 (British Petroleum, 2019b). Gas Reserves, Supply, and Demand of China China has already set a goal of no less than 10% of natural gas in TPES (National Development and Reform Commission China is scarce in natural gas resources. As the largest energy [NDRC] and National Energy Administration [NEA] of consumer of the word, it only owns 3.1% of world natural China, 2016), and it was projected that by 2040, China’s gas reserves, with proved natural gas reserves merely 6.1 tril- demand for natural gas would increase by 166% on 2017 lion cubic meters, ranking seventh in the world (British level, whose share in energy mix would double to 14%, and Petroleum, 2019b). In fact, gas fields are mainly located in the gas dependence would rise up to more than 43% (British western and northern regions of China, and three basins (the Petroleum, 2019a). To fill this expanding gap between Tarim Basin in Xinjiang, the Ordos Basin across Inner domestic gas supply and demand, it has to seek for a reliable Mongolia, Shaanxi and Ningxia, and the Sichuan Basin) and sustainable gas supply from external market. However, cover more than half of proven gas reserves of China the gas importation is a major challenge for the sustainable (Higashi, 2009). gas supply of China. How to protect its external gas supply Traditionally, natural gas did not play an important role from various kinds of risks has drawn intensive concern from in China’s energy supply until early 21st century, when its policy makers and energy experts. economy and energy demand grew at a surprising speed, and Therefore, this article describes the natural gas supply and it has to seek for alternative fuels to increase energy supply demand situation, and analyzes the five main corridors of and diversify its energy mix (see Figure 1). After that, natural gas importation in China. Then, from a perspective of China’s natural gas production and consumption increased supply chain, it identifies 11 risk indicators for evaluating the dramatically, and the gap between domestic gas supply and 5 corridors using the Fuzzy AHP and Technique for Order demand kept expanding, as shown in Figure 2. To fill this Preference by Similarity to Ideal Solution (TOPSIS) meth- gas, China has to seek for gas supply from the international ods. Finally, it draws some conclusions for this research and market. provides some policy implementations for ensuring the secu- During the past decade, China has imported natural gas rity of China’s natural gas importation. from about 30 countries, as shown in Table 1. While only half of them are the regular gas suppliers, who used to pro- vide natural gas to China more than 5 years. According to China’s Natural Gas Supply and Table 1, several features that label the evolution of China’s Demand natural gas import structure can be identified. First, the num- From a worldwide perspective, natural gas is also one of the ber of gas-importing sources was increasing steadily, and the main energy sources that drives world economy develop- geographical location of importing sources kept expanding, ment, with a share of more than 23.9% in world energy mix which means the diversification strategy of importing in 2018 (British Petroleum, 2019b). It is expected to sup- sources has shown very good effects. Second, China’s gas port the sustainable energy transition process (Gillessen dependence on Asian Pacific countries showed a decreasing et al., 2019) and remain the main energy source in the trend when the importing volume increased, and it is seeking 2018 Zhang and Bai 3 Production Consumption 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Figure 2. Production and consumption of natural gas in China (2003–2018). Source. British Petroleum (2019b). Table 1. Sources of China’s Natural Gas Importation, 2006–2018 (%). Country 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Turkmenistan 21.73 45.92 51.48 46.51 43.74 46.05 40.04 35.77 27.45 Uzbekistan 0.36 5.51 4.17 2.56 5.86 3.78 5.19 Kazakhstan 0.30 0.68 0.59 0.58 1.18 4.45 Qatar 7.24 10.15 10.32 16.35 17.76 15.71 10.86 9.20 10.92 10.47 Yemen 4.42 3.59 1.97 2.94 2.39 0.60 Oman 2.04 1.19 0.21 0.30 0.14 0.11 0.36 0.58 Egypt 5.46 0.49 0.79 0.96 1.12 0.28 0.12 0.08 0.25 Algeria 10.73 3.87 0.19 0.15 0.55 0.85 0.08 0.08 United Arab Emirates 0.54 Australia 100 85.05 81.47 63.31 32.83 16.12 11.69 9.34 8.90 12.49 22.17 25.20 26.46 Malaysia 0.26 11.85 9.92 6.96 6.08 6.98 6.99 7.34 4.79 6.15 6.51 Indonesia 9.73 14.25 8.80 7.94 6.39 5.96 6.47 5.16 4.47 3.05 Papua New Guinea 0.67 3.55 3.94 3.06 2.72 Brunei Darussalam 0.27 0.11 0.19 0.25 Singapore 0.22 0.33 Myanmar 0.41 5.14 6.51 5.29 3.67 2.39 Russian Federation 3.44 3.19 1.12 1.24 0.30 0.43 0.47 0.65 1.07 Equatorial Guinea 3.51 1.06 0.50 0.53 1.05 1.67 0.44 0.19 Nigeria 2.18 5.44 1.12 1.09 3.17 0.99 0.96 1.00 0.70 0.50 0.48 0.91 Angola 0.17 0.30 0.38 0.58 Trinidad and Tobago 1.05 0.41 1.45 0.54 0.28 0.26 0.13 0.21 0.17 0.41 Peru 0.63 0.46 0.10 0.08 United States of America 0.14 0.37 2.21 2.47 Norway 0.29 0.14 0.35 0.18 0.25 Netherlands 0.15 France 0.28 Source. Authors’ calculation based on data from UN Comtrade Database and British Petroleum (2019b). to acquire natural gas from a worldwide perspective. Third, Gas Infrastructure Central Asia has been a very important gas supplier since Since China’s gas suppliers are located all over the world, the 2010, when the Central Asia–China gas pipelines were con- gas freights must be transported to this country through dif- structed (Hu, 2014). Finally, pipeline gas gradually increases ferent routes. However, due to the special nature of natural its share in total gas imports, and China is ensuring its exter- gas in state, there are two kinds of transport carriers for natu- nal gas supply from both inland and seaborne routes (Hu, ral gas shipping: seaborne shipment for liquefied natural gas (LNG) and pipeline transport for gaseous natural gas. 2014; Leung et al., 2014). Trillion Cubic Meters 4 SAGE Open Table 2. List of China’s Existing LNG Terminals (As of Early 2018). Capacity Capacity Completion Location after phase 1 after phase 2 Main owners year Dapeng, Shenzhen, Guangdong 5.2 bcm/year 9.5 bcm/year CNOOC, BP 2006 Wuhaogou, Shanghai 0.7 bcm/year Shenergy 2008 Putian, Fujian 3.6 bcm/year 7 bcm/year CNOOC, Zhongmin Energy 2008 Yangshan Port, Shanghai 4.2 bcm/year 8.4 bcm/year CNOOC, Shenergy 2009 Dalian, Liaoning 4.2 bcm/year 8.4 bcm/year CNPC, Dalian Port 2011 Rudong, Jiangsu 4.8 bcm/year 8.7 bcm/year CNPC, Pacific Oil & Gas 2011 Ningbo, Zhejiang 4.2 bcm/year 8.4 bcm/year CNOOC, Zhejiang Energy 2012 Shennan, Hainan 1.4 bcm/year Jovo Energy 2012 Tangshan, Hebei 4.8 bcm/year 8.7 bcm/year CNPC, Beijing Enterprises 2013 Zhuhai, Guangdong 4.8 bcm/year 14 bcm/year CNOOC 2013 Tianjin 3.1 bcm/year 8.4 bcm/year CNOOC, Tianjin Port 2013 Qingdao, Shandong 4.2 bcm/year 7 bcm/year Sinopec 2014 Hainan 4.2 bcm/year CNOOC 2014 Diefu, Shenzhen, Guangdong 5.6 bcm/year CNOOC, Shenzhen Energy 2015 Beihai, Guangxi 4.2 bcm/year 8.4 bcm/year Sinopec 2016 Jieyang, Guangdong 2.8 bcm/year CNOOC 2017 Source. Authors’ calculation based on data from internet and academic articles. LNG = liquefied natural gas. Table 3. Schedule of LNG Project in China (As of Early 2018). Situation of LNG terminals Operation Expansion Completed Construction Approved Planning Suspended Number of LNG terminals 12 8 2 10 9 30 7 Source. Sun et al. (2016); Shan et al. (2016); LNG Industry Information (2018). LNG = liquefied natural gas. In the late 1990s, to deal with the shortage of energy sup- 40 to 45 LNG carriers every year if the LNG terminals are ply in the southeast provinces, the Chinese central govern- fully utilized (Liu, 2014). Presently, only a small part of ment approved the first LNG project (Lin et al., 2010). China’s LNG imports is carried by its own LNG carriers, Finally, China’s first LNG-receiving terminal was put into while most of the LNG freights have to rely on the charter operation in 2006 and received the first LNG cargo freight market (Zhang et al., 2016). from Australia (Tang, 2014). In fact, China has planned to Another mode for conveying gas imports is pipeline. build more than 15 LNG terminals when its first LNG termi- China has intended to construct gas pipelines to purchase nal was still in construction (see Table 2). However, due to Russia’s natural gas in the Far East since 1994 (Hao & Sun, the rapidly increasing energy price in international energy 2014). However, due to the policy changes of Russia in the market, only three terminals were put into operation before 21st century, the negotiations have been hindered by the dis- 2010 (ARA International Limited, 2015). After 2008, the putes on gas trade volume and price, pipeline distribution, global economic crisis led to decreasing energy price, which construction, and operation (Zhang & Bai, 2014). After stimulated China’s ambition on LNG importation and infra- nearly 20 years of negotiations, the gas deal between Russia structure construction. As of early 2018, 20 LNG terminals and China was finally signed in 2014, which would provide have been constructed, and 12 of them have been put into 38 bcm of natural gas to China every year from late 2019 operation, with a total annual capacity of 80 million tons, as by building a cross-border gas pipeline in Northeast China shown in Table 3. Besides, another six terminals and several (Dong et al., 2014; Koch-Weser & Murray, 2014). second-phase projects of existing terminals, about 21 million In fact, at the same time of gas negotiations with Russia, tons of capacity, are still in construction (LNG Industry China has paid great efforts and eventually reached agree- Information, 2018). ments with three Central Asian countries and Myanmar on To deliver the LNG freights to China, the first LNG car- cross-border gas pipelines. The Central Asia–China gas pipe- rier was put into operation in 2008. By 2014, China only lines were constructed based on Kazakhstan–China oil pipe- owns six LNG carriers, which were joint ventures between a lines, then connected with Uzbekistan and Turkmenistan Chinese shipping company and the BP Shipping (Liu, 2014). and were put into operation in 2010 (Fazilov & Chen, 2013; When estimated that one conventional LNG carrier can Hancock, 2006). By 2015, Line A, B, and C has already been deliver a million tons of LNG in 1 year, China needs at least completed, with a total annual gas capacity of 55 bcm (China Zhang and Bai 5 Table 4. Corridors of China’s Natural Gas Importation. Transport modes Routes Length (km) Capacity (bcm/year) Completion year Inland transport C : Central Asia–China gas Pipeline A 1833 15 2009 routes Pipeline B 1833 15 2009 Pipeline C 1830 25 2012 Pipeline D 1000 30 2024 C : Myanmar–China gas pipeline 2520 12 2012 C : Russia–China gas pipeline East Line 3,968 38 2019 Seaborne shipping C : Middle East/North Africa–Indian Ocean–Malacca 9,406 (from Doha – – routes Strait–South China Sea–China to Shanghai) C : Australia/Southeast Asia–South China 3,900 (from Darwin – – Sea–China to Shenzhen) Source. Authors’ calculation based on data from internet and academic articles. National Petroleum Corporation [CNPC], 2014). Besides, gas importation. In fact, the security of natural gas importa- the construction of Line D has also been initiated in 2014, tion has faced up with various potential risks caused by with a designed annual deliverability of 30 bcm, routed via human and nonhuman factors. Uzbekistan, Tajikistan, and Kyrgyzstan to China and was expected to be completed by the end of 2020 (CNPC, 2014). Literature Review The Myanmar–China gas pipelines were completed in 2013, which can transport gas produced in Myanmar to China With the increasing demand for natural gas in recent years, without the restriction of Malacca Strait (H. Zhao, 2012), the security and reliability of natural gas supply becomes an with an annual gas delivery capacity of 12 bcm (Shan et al., important issue of concern to the policy makers, especially 2016). for the European and East Asian countries, who are the main gas importers in international gas market. Scholars have done intensive work on the security and sustainability of Corridors of China’s Natural Gas Importation natural gas supply or these regions and states. Considered China’s gas imports will keep expanding in the Europe is the largest natural gas importer of the world, near future (Sandalow et al., 2018), the patency and security and European energy security issues concerning natural gas of corridors for gas importation is of great significance to its has drawn great attention from scholars and policy makers. energy security and sustainability. Therefore, it requires Stern (2002) analyzed factors concerning European natural China to construct diversified, reliable, and secure supply gas supply from a traditional perspective using four indica- pattern for the increasing natural gas imports. tors: import dependence, relationships with non-European According to China’s gas-importing sources and gas exporting countries, security policy in traditional and liberal- infrastructure distribution, several corridors for natural gas ized gas markets, and security arrangements in liberalized importation can be identified, as shown in Table 4. It can be markets. It is believed that long-term contracts and geopoliti- found that this country has established both inland and sea- cal considerations strongly affected European natural gas borne corridors to keep natural gas supply. For several years, supply (Percebois, 2008). Pavlović et al. (2018) proposed a Southeast Asia and Australia are the main sources of China’s robust composite index for measuring natural gas supply external gas supply. In particular, Australia used to be the security of Croatia, which included energy import depen- largest LNG supplier, who provided more than half of gas dency index, energy intensity, gross inland consumption, imports of this country before 2009. From 2010, the Central index of national economy dependence on natural gas, Asia–China gas pipelines and Myanmar–China pipeline Herfindahl–Hirschman Index, and Shannon–Wiener Index. were put into operation one after another, which undertook European Union is extremely relying on external gas sup- half of China’s gas imports, increased extra access to exter- ply, so disruption of natural gas supply highlights the threat nal gas supply and opened up a new door for China’s gas to energy security and sustainability. From the perspective of importation in the west. contract actions, contract prices and benefits, Abada and Massol (2011) investigated the impact of the uncertainty of natural gas supply disruptions using a static Cournot game Identified Risks for China’s Natural Gas model. Based on Monte-Carlo simulation, Praks et al. (2017) Importation assessed the reliability and vulnerability of European gas To secure China’s natural gas importation, it is necessary to transmission networks. Geopolitics and international rela- identify the possible risk factors for the corridors of natural tionships are importing factors leading to disruptions of gas 6 SAGE Open supply, which must be taken into consideration when assess- sector, refining, and reserve sectors. Shaikh et al. (2016b) and ing the security of European gas imports (Lochner & Shaikh, Ji, and Fan (2017) measured the sustainability and Dieckhöner, 2012). Using a Stackelberg game model, Grais security of China’s natural gas supply through an ecological and Zheng (1994) analyzed the impact of relationships network analysis. By constructing a mathematical program- among suppliers, transporters, and importers on the security ming model, which considered various aspects of energy of natural gas importation. Richter and Holz (2015) analyzed security: diversification, lower dependency, supplier export the impact of disruptions of natural gas supply from Russia capacity, minimizing the import cost, transport distance, and on European countries. It is found that increased deliveries political instability of the foreign natural gas suppliers, of Russian pipeline gas led to more political risk due to the Shaikh, Ji, Fan, Shaikh, et al. (2017) also analyzed the opti- increased dependence on one supplier, while importing more mal natural gas import scheme for China. Geng et al. (2017) LNG means more technical and financial risks (Eser et al., constructed a multiobjective optimization model by consid- 2019). So, it was crucial to improve infrastructure as quickly ering multiple risk factors: maritime transportation distances, as possible to ensure an adequate natural gas supply for all pirate attacks, economic risks of importation, exporting European Union member countries (Zeniewski & Bolado- countries’ political risks, and maritime transportation risks, Lavin, 2012). to stimulate the optimal LNG importation portfolio of China. In order to ensure security of natural gas supply in Europe, Using the same method, Zhang, Zhong, et al. (2017) consid- some researchers have assessed all kinds of risks for natural ered cost, country risk, shipping risk, and impact of extreme gas supply security. Weisser (2007) introduced several risks events, to analyze China’s LNG import. Kong et al. (2019) for European gas supply security, that is, source dependence, designed an evaluation framework with full consideration of transit dependence, facility dependence, structural risks, resource risk, political risk, transport risk, price volatility natural disaster, political blackmail, terrorism, war, and civil risk, purchasing power risk, and dependence risk, to evaluate unrest. Doukas et al. (2011) also identified seven risks on the the import risks of natural gas for China. security of European gas supply: conflicts, political instabil- These studies have evaluated the security or risks of natu- ity, terrorist attacks, export restriction, accidents, weather ral gas supply and importations in detail. However, some conditions, and monopolistic practices. Biresselioglu et al. problems still need further discussions. First, most of them (2012) constructed a multiobjective programming model, are conducted from a perspective of foreign dependence or which involved political, economic, and security risks for importing sources, very few of them have considered possi- analyzing Turkey’s LNG security policy. ble risks in the gas supply chain, and our study can be taken Asia-Pacific region is another area that is closely con- as a contribution to literature by summarizing the risk factors nected with international natural gas market for gas supply, from a supply chain perspective together with Pavlović et al. and no shortage of researches has been done to investigate (2018) and Kong et al. (2019). Second, few researches have the security of natural gas supply in this region. Jun et al. analyzed gas importation security by identifying corridors of (2009), Manuhutu and Owen (2010), and Vivoda (2014) gas supply and the associated risks. Finally, a lot of researches used the Herfindahl–Hirschman Index to assess the security focused on the overall security of gas importation, and and risks for Korea, China, and other major LNG-importing ignored the risks of individual suppliers or transport routes. countries in the Asia-Pacific region. Cabalu and Manuhutu (2009) examined the vulnerability of eight Asian gas-import- Risk Criteria for Corridors of China’s Natural Gas ing countries using Principal Component Analysis to analyze Importation four market risk indicators (cost of imported gas in national income, gas intensity, gas consumption per capita, and gas In order to evaluate the risks for corridors of China’s natural share in TPES) and two supply risk indicators (ratio of gas importation, we need to select the appropriate risk crite- domestic gas production to consumption and geopolitical ria. To do that, we firstly reviewed the possible criteria in the risk). Cabalu (2010) also proposed a gas supply security literature aimed at evaluating security and risks of natural index to evaluate security of natural gas supply in Asia with gas supply (see Table 5). Then, taking a perspective of natu- the indicators of gas intensity, net gas import dependency, ral gas supply chain, which consists of three stages: external ratio of domestic gas production to consumption, and geopo- dependence stage, transportation stages, and external supply litical risk. By employing the ecological network analysis, stages, we filtered and selected risk criteria for each stage. Shaikh et al. (2016a) assessed the security of natural gas sup- Finally, 11 risk indicators were identified (see Figure 3), plies in the Asia-Pacific region and found that diversification which were described more detailed in Table 6. can help improve natural gas supply security. As the largest gas consumer and importer in this region, I : Dependence risk. At the initial stage of natural gas impor- China has drawn a great deal of scholars to investigate its tation, dependence risk determined the amount of gas impor- natural gas supply. Lu et al. (2016) comprehensively evalu- tation as well as importer’s degree of dependence on the ated China’s natural gas supply security that integrated vari- exporters, which reflects the risks associated with the gas ous components, including supply sources, consumption exporters’ monopoly control over importer’s gas imports. Zhang and Bai 7 Table 5. Summary of Previous Research on Security and Risks of Natural Gas Supply. Authors Risk factors and variables Methods and models Grais and Zheng (1994) Relationships among suppliers, transporters, and importers Stackelberg game model Stern (2002) Import dependence, relationships with non-European Qualitative and descriptive analysis exporting countries, security policy in traditional and liberalized gas markets, and security arrangements in liberalized markets Weisser (2007) Source dependence, transit dependence, facility dependence, Qualitative and descriptive analysis structural risks, natural disaster, political blackmail, terrorism, war, and civil unrest Percebois (2008) Long-term contracts and geopolitical considerations in the Qualitative and descriptive analysis relationships with main suppliers Cabalu and Manuhutu (2009) Cost of imported gas in national income, gas intensity, gas An index derived by Simple consumption per capita, gas share in TPES, ratio of domestic Additive Weighting method, with gas production to consumption, and geopolitical risk the weight defined by Principal Component Analysis Jun et al. (2009) Herfindahl–Hirschman Index Qualitative and descriptive analysis Cabalu (2010) Gas intensity, net gas import dependency, ratio of domestic Gas supply security index derived gas production to consumption, and geopolitical risk by Root Mean Square method Manuhutu and Owen (2010) Herfindahl–Hirschman Index Qualitative and descriptive analysis Abada and Massol (2011) Uncertainty of natural gas supply disruptions Static Cournot game model Doukas et al. (2011) Conflicts, political instability, terrorist attacks, export Qualitative and descriptive analysis restriction, accidents, weather conditions, and monopolistic practices Biresselioglu et al. (2012) Political, economic, and security risks Multiobjective programming model Lochner and Dieckhöner (2012) Geopolitics and international relationships Linear optimization model Vivoda (2014) Herfindahl–Hirschman Index Qualitative and descriptive analysis Richter and Holz (2015) Disruptions of natural gas supply Global Gas Model Lu et al. (2016) Supply sources, consumption sector, refining, and reserve Network Information Analysis sectors in a system Geng et al. (2017) Maritime transportation distances, the risk of pirate attacks, Multiobjective optimisation model economic risks of importation, the exporting countries’ political risks and the maritime transportation risks Praks et al. (2017) Gas supply disruptions Monte-Carlo simulation Shaikh, Ji, Fan, Shaikh, et al. Diversification, lower dependency, supplier export capacity, Mathematical programming model (2017) minimizing the import cost, transport distance, and political instability associated with each of the foreign natural gas suppliers Zhang, Zhong, et al. (2017) Cost, country risk, shipping risk, and impact of extreme events Multiobjective optimisation model Pavlović et al. (2018) Energy import dependency index, energy intensity, gross An index derived by Simple inland consumption, index of national economy dependence Additive Weighting method, on natural gas, Herfindahl–Hirschman Index, and Shannon– with the weight defined by the Wiener Index authors Kong et al. (2019) Resource risk, political risk, transport risk, price volatility risk, An index derived by Simple purchasing power risk, and dependence risk Additive Weighting method, with the weight defined by two-phase data envelope analysis Note. TPES = total primary energy supply. This risk indicator is usually measured by the proportion such as meteorological and geological disasters, and pirate of the net gas imports of suppliers in the gas corridors in attacks, and pay higher prices for long-distance transport. importer’s total gas imports (Zhang et al., 2013). I : Risks from stakeholders. Since long-distance gas shipment I : Transport distance. Transport distance is a very important may pass through the territory of other countries or the choke- factor that affects the security of natural gas importation and points and some dangerous waters, which will pose additional transportation. With longer transport distance, the importer geopolitical risks. The most typical case is the Russia–Ukraine may have a higher probability of encountering various risks, gas crisis, which lead to the gas supply disruptions in South 8 SAGE Open Figure 3. Supply chain and risks for natural gas transport routes. Table 6. Indicators for the Risks of China’s Natural Gas Transport Routes. Risks Descriptions Data source Property Unit I : Dependence risk The proportion of net gas imports from suppliers in British Petroleum (2019b) – % this corridor in importer’s total gas imports I : Transport distance The average distance from the start to the destination Shan et al. (2016); – km of transport corridor SEA-DISTANCES.ORG I : Risks from stakeholders Number of countries, straits or seas in the Wang and Sang (2010); – / transportation corridor Zhao (2014) I : Transport independence Importer’s control over the transport carriers, e.g., Author’s calculation based + % share in ownership on project information I : Terrorist or pirate attacks Terrorist and pirate attacks in the transportation Global Terrorism Index and – / corridor Annual IMB Piracy Report I : Transport accidents Any form of unwilling accidents may happen during Expert judgments – / transport, e.g., tanker sinking, explosions, fire, and leaks I : Vulnerability to unexpected Supply interruption due to hurricanes, earthquakes, Expert judgments – / natural disasters temperature, and other physical phenomena I : Financial risk The average gas price in the transportation corridor UN Comtrade Database – USD/kg I : Resource risk The reserve to production ratio of gas suppliers in the British Petroleum (2019b) + Year transport corridor I : Relationship with exporting The political and economic relationship between Chinese embassies + / and transit countries trading parties can affect gas trade and transport I : Political stability of Political stability of importing sources can affect their World Bank + / exporters gas exporting capacity Source. Authors’ summarization based on risk factors in Table 5. Note. “–” indicates this is a cost-type indicator, which means smaller value represent better effect. “+” indicates benefit-type indicators, which means larger value represents better effect. IMB = International Maritime Bureau, UN = United Nations. Eastern Europe (Kovacevic, 2009; Larrabee, 2010). There- I : Transport independence. Transport carriers are important fore, it is necessary to consider the risks from stakeholders shipping media for natural gas shipment, and it determined along the corridors. importing country’s flexibility and capacity in natural gas Zhang and Bai 9 transportation, which can have a neglectable influence on the price is usually determined through a negotiation mechanism security of natural gas supply (Villada & Olaya, 2013). The (Dastan, 2018; Shnyakina & Sun, 2018). In fact, economic main transport carriers for natural gas are pipelines and cost can be a factor with great significance in gas negotiation LNG carriers. China only owns six LNG carriers, and five of and contract (Geng & Ji, 2014). The gas negotiation between them undertake the LNG conveyance from Australia and China and Russia lasted for 20 years, for which an important Southeast Asia to Guangdong and Fujian (REALIZE, 2018). reason is that they could not reach an agreement on gas price While, LNG imports of the eastern and northern coastal and the distribution of gas pipelines (Zhao, 2014). provinces mainly come from the Middle East, and the trans- port was carried mainly by leasing LNG carriers. According I : Resource risk. During the past year of 2018, global gas to the project materials, the Central Asia–China gas pipelines consumption has increased by 195 billion bcm, or 5.3% on were joint ventured by China and countries along them, and 2017 level, which is one of the fastest growth rates since China owns half ownership (Wang et al., 2014). Similarly, 1984 (British Petroleum, 2019b). With the continuously CNPC, one of China’s three biggest petroleum companies, increasing gas consumption and fierce gas market competi- has 50.9% of ownership and franchise of Myanmar–China tion, the availability and accessibility of gas resources may gas pipelines (Li et al., 2013). Although China will not have experience great challenges and threats (Kong et al., 2019). any ownership in the Russia–China gas pipelines in Russia, This risk indicator can be estimated by reserve to produc- it will provide a small part in the financial investment (China tion ratio of gas suppliers in the transport corridor (Kong News, 2014). et al., 2019). I : Terrorist or pirate attacks. The risk of terrorist and pirate I : Relationships with exporting and transit countries. Tradi- 5 10 attacks is another risk factor for cross-border and long- tionally, energy policy usually focuses on market liberaliza- distance gas transport. In recent years, terrorism goes to priv- tion, competition, and climate targets, while ignores the ilege due to the political changes around the world (Dingley, hindering effect of geopolitical logic, which can underplay 2016), and pirate attacks have also become an international the important economic, technical, and security challenges threat for marine transport, especially for goods shipments (Siddi, 2019). The economic and political relationship from Somalia to Indonesia (Acciaro & Serra, 2013; Murphy, between gas supplier and importer is of great significance to 2013). the stability of natural gas importation, as well as the rela- tionship with the transit countries (Shaffer, 2013). Therefore, I : Transport accidents. During the long-distance gas trans- energy has always been an import topic in China’s foreign port, any form of unwilling accidents may happen. No matter policy and affairs (Medeiros & Fravel, 2003; Ziegler, 2006). for LNG transport, or gas pipelines, accident such as explo- sions, fire and leaks are the potential risks that may threat the I : Political stability of exporters. The political changes of gas security of gas conveyance. By reviewing major global suppliers can also lead to instability and interruption of gas energy accidents, it is found that piped natural gases (PNGs) supply (Flouri et al., 2015; Shaffer, 2013). Especially that are exposed to a higher possibility of leakage, fire, and even most of world’s large energy suppliers are located in Middle explosion than LNG (Burgherr & Hirschberg, 2014; Montiel East, Africa, and Central America, which is vulnerable to et al., 1996; Sovacool, 2008), despite that natural gas has the political instability and military conflicts. lowest frequency of severe accidents involving fatalities among various fossil fuels (Hirschberg et al., 2004). Data and Methodology I : Vulnerability to unexpected natural disasters. Due to that gas Data Description pipelines and LNG shipping routes may go through different orographic and weather conditions, and these natural factors After determining the risk indicators for China’s corridors of may cause various natural disasters, such as hurricanes, natural gas importation, the data for the two seaborne LNG earthquakes, extreme temperature, and other physical phe- corridors and three pipeline corridors with respect to the 11 nomena, which may lead to the interruption of gas supply risk indicators are collected, as shown in Table 7. (Doukas et al., 2011). There is something about the data that need to be explained. First, the distance of gas pipelines counts in both I : Financial risk. The price formation mechanism of natural foreign and domestic pipelines that need to be newly con- gas is so complicated, especially for LNG, and a lot of fac- structed. While, when collecting the data for ownership over tors may lead to the variation of LNG prices. Usually, LNG these pipelines, only the pipelines in foreign countries are price is closely related to global oil market (Brown & Yucel, counted. Second, the distance of Middle East–China LNG 2008), which means is may experience greater price fluctua- transport route is calculated from Doha Port in Qatar to tions (Caldara et al., 2019; Yao & Kuang, 2019). While PNG Shanghai Port in China, while that of Australia/Southeast 10 SAGE Open Table 7. Data for Corridors of China’s Natural Gas Importation With Respect to the Indicators. Corridors I I I I I I I I I I I 1 2 3 4 5 6 7 8 9 10 11 C 25.4 1,833 6 50 2 5 2 0.28 152.3 8 0.08 C 2.4 2,520 2 50.9 2 7 6 0.47 67.4 6 −1.06 C 15.8 3,968 2 0 4 6 4 0.5 58.1 9 −0.84 C 11.4 9,406 6 3 10 5 10 0.44 96.9 6 1 C 39 3,900 3 18 8 2 6 0.37 27.7 6 1.29 Note. Price for LNG is calculated based on the data for 2017 from UN Comtrade Database, while the price for PNG is estimated based on the deal price. LNG = liquefied natural gas, UN = United Nations. Table 8. The Linguistic Terms and Corresponding Fuzzy Scales. Asia–China is calculated from Darwin Port in Australia to Shenzhen Port in China; the ownership over LNG carriers is Linguistic scales Triangular fuzzy scales also calculated based on the situation of LNG carriers and Equally important (E) (1, 1, 1) terminals. Third, when collecting the data with respect to ter- Weakly important (W) (2/3, 1, 2) rorist or pirate attacks (I ), transport accidents (I ), and vul- 5 6 Moderately important (M) (1, 3/2, 2) nerability to unexpected natural disasters (I ), relationships Fairly strongly important (F) (3/2, 2, 5/2) with exporting and transit countries (I ), these risk indica- Very strongly important (V) (2, 5/2, 3) tors are rated based on related reports and workshop discus- Absolutely important (A) (5/2, 3, 7/2) sions. Finally, since the Russia–China gas pipeline will not Reciprocals of these Reciprocals of the fuzzy numbers be in operation until 2020, the volume of PNG imported from Russia through this corridor is estimated by its capacity, Source. Ren and Sovacool (2014); Zhang et al. (2018). which almost equals to the PNG volume imported from Turkmenistan in 2018, so we will use this volume number to Methods measure the dependence risk. To assess the risk of China’s corridors of natural gas Fuzzy AHP. Fuzzy AHP is an effective way to determine the importation, 11 risk indicators have been selected. Obviously, weight of criteria and indicators (Ren & Lützen, 2015). this is a multiattribute decision-making problem with uncer- Before conducting Fuzzy AHP, a hierarchy structure model tainty and ambiguity (Zhang et al., 2018), and we need to should be developed to define the decision problem first. In determine the weight for the risk indicators, and derive a this article, the hierarchy model for the security of China’s composite risk index for the evaluation (Biresselioglu et al., natural gas importation is as shown in Figure 3. In this hier- 2012; Cabalu, 2010; Cabalu & Manuhutu, 2009; Geng et al., archy model, the top level defines the overall goal of this 2017; Kong et al., 2019; Lochner & Dieckhöner, 2012; assessment, which is the risk status of China’s natural gas Pavlović et al., 2018; Shaikh, Ji, & Fan, 2017; Zhang, Zhong, importation, the second level describes the three stages of et al., 2017). Multicriteria decision-making methods are China’s natural gas importation, and the bottom level identi- thought to be the most appropriate techniques for evaluating fies the specific risk indicators in each stage. the risks in energy supply and planning (Rostamzadeh et al., The procedure of fuzzy AHP is as follows: 2018). By taking the multicriteria decision-making methods, Step 1: Making pairwise comparisons for the indica- Ervural et al. (2018) used ANP and Fuzzy TOPSIS to analyze tors according to their relative importance with respect to Turkey’s energy planning. Liu and Wei (2018) also evaluate the upper-level factor using fuzzy numbers (as shown in the risks in electric vehicle charging infrastructure projects Table 8). using Fuzzy TOPSIS. Solangi et al. (2019) prioritized the Step 2: Establishing the comparison matrix based on pair- renewable energy sources in Pakistan with an integrated wise comparison in Step 1. Here we assume that a total of n Delphi-AHP and Fuzzy TOPSIS approach. criteria are included in the decision unit, with the criteria ith Therefore, we also used a hybrid multicriteria decision- represented by C . Then, the fuzzy comparison matrix can be making model to evaluate the risks of China’s five corridors obtained as shown follows: of natural gas importation. In detail, Fuzzy AHP was usually used to determine the weight of indicators (Hwang & Yoon, mm m mm m 1 1 12 11 jn 12 11 jn 1981; Zhang, Yu, et al., 2017), and the method of TOPSIS mm m mm m was utilized to rank or prioritize the alternatives (Azimi 21 1 22 jn 11 12 22 jn M = = et al., 2011; Ren & Lützen, 2015). Here in our research, these (1) mm m mm m 1 11 1 ii 12 in 12 jj in two methods would be combined to assess the risk status of mm m mm m 1 11 111 China’s five corridors of natural gas importation. nn 12 nj 12 nn in Zhang and Bai 11 L M U mm = (,mm ,) where is the triangular fuzzy number, where kn = 12 ,,, and k ≠ i. ij ij ij ij L U M Assume that ′ , then the weight vec- m dC () =≥ min( VS S ) m , m , and represents the lowest possible value, most ii k ij ij ij tor for the n criteria can be defined by Equation (8). possible value, and highest possible value, respectively. Step 3: Computing the value of fuzzy synthetic extent (8) ith ′ ′′ ′ with respect to the criterion, which is defined as Wd = () Cd ,(Cd ), ..., () C () 12 n −1 n n n Step 6: Normalizing the weight vectors, which is    (2) Sm =⊗ m ∑ ij ∑∑ ij   T T j =1  i=1 j =1  Wd == () Cd ,(Cd ), ..., () Cw ,, ww ..., (9) () () 12 n 12 n where where n n n n   L M U ′′ dC () = dC () /( dC ) (10) ii i i=1 mm == ,, mm ,, ij 12 ,,…, n (3) ∑∑ ij ∑ ∑  ij ij ij  j == 11  j =1 j j =1  TOPSIS. TOPSIS prioritizes the alternatives by relying on the −1 11 1   Euclidean distance between the evaluation objects and the n n ,,   n n n n n n    positive or negative ideal solutions, and the procedure of (4) m = ij ∑∑ L M U   mm m  ∑∑ ∑ ∑ ∑∑  ij ij ijj conducting TOPSIS is as following:  i =1 j =1   i == 11 j =1 i =1 j i =1 j =1  Step 1: To facilitate the aggregation of these indicators, it is necessary to perform data normalization. The benefit-type L M U Noting that SS = (,SS ,) is the value of the fuzzy ii i i indicators should be normalized by Equation (11), and the L M synthetic extent with respect to the ith criterion, , S , and i i cost-type indicators should be normalized by Equation (12). S S are the three element of the triangular number of . i i Step 3: Calculating the degree of possibility of xx − min ij j L M U L M U p = SS =≥ (, SS ,) SS = (, SS ,) by Equation (5). (11) ij ii i i jj j j maxm xx − in jj M M  1 SS ≥ i j max xx − jij  L U p = (12) 0 SS ≥ ij j i maxm xx − in jj L U p =≥ VS () S = SS −  (5) ij ij j i where p is the normalized value of the ith gas transport cor- oth herwise ij M U () SS −− ridor with respect to the jth indicator, x represents the origi- i i ij nal value of the ith gas transport corridor with respect to the M L () SS −  j j jth indicator, and max x and min x are the maximum and j j minimum value of the corridors of China’s gas importation Step 4: Determining the possibility matrix, which is used with respect to the jth indicator. to describe the relative significance of each pair of criteria Step 2: Computing the weighted normalized decision using the corresponding value of their fuzzy synthetic extent matrix , in which Zz = () ij mn × as shown in Equation (6). zw =* p (13) ij jij   / pp p 12 11 jn Step 3: Selecting the maximum and minimum x′ for each ij   pp / p 21 22 jn indicator in matrix Z, then the positive and negative ideal P = (6) + − solutions, Z and Z can be acquired.   pp / p j ii 12 in + − Step 4: Calculating d and d , the Euclidean distances   pp p / between the evaluating objects and the ideal solutions by nn 12 nj Equations (14) and (15). Step 5: Obtaining the degree of possibility for the fuzzy synthetic extent with respect to each criterion to be greater n (14) ++ 2 than that for all the other criteria. For instance, the degree of dz =− () z iijj possibility for the fuzzy synthetic extent with respect the ith j=1 criterion is greater than that with respect to all the other cri- teria can be defined as follows: −− 2 (15) dz =− () z iijj VS (, ≥= SS ,,  SS ,, )( VS ≥ S ) and ik 12 ni 1 j=1 VS () ≥ SV and ... and (S ≥≥ S ) ii 2 n Step 5: Obtaining the proximity of the evaluating objects (7) to the ideal solutions according to Equation (16), and the =≥ min( VS S ) ik 12 SAGE Open smaller value of the proximity indicates better performance. presented in Table 7 and Figure 3, we use linguistic terms In this article, the proximity value represents the closeness of and the corresponding fuzzy numbers (see Table 8) to make the alternative to the positive ideal solution, and the greater pairwise comparisons for the three stages of natural gas value means further distance from the positive ideal solution, importation as well as the risk indicators in each stage which can also be seen as higher risks. Therefore, we use this through a workshop discussion based on literature review proximity value as the Risk Index of China’s corridors of and judgment of expert group on the topic (Ren & Sovacool, natural gas importation, which is within the range of 0 to 1. 2014). The fuzzy judgment matrix with respect to the overall goal and the three stages are as following: (16) RI == C i (, 111 ,) (, 25 12,) 23 (, 12 23,) 1 +−   dd + ii   A = (, 32 25 ,) 2 (, 111 ,) (, 13 22 ,)    (, 13 2, 2 21 )( 22 ,, 31)(111 ,, )  Analysis and Results   With the indicators and their data with respect to the risk indicators of China’s corridors of natural gas importation A = (, 111 ,) [] (, 111 ,) () 1,32,2 () 52,3, 72 () 1,32,2 () 2,52,3 () 32,2,52     (12, 23,,12 )(111 ,, )( ,, 52 31 )( ,, 32 2)(32,2,52)(1,32,2)     () 27 ,, 13 25 (1/3,, 25,1/2, )(111 ,, )(12 23,1)(12,1,32)(12,1,32) A =   () 12,, 23 1, (12 23,,11 )( ,, 32 21 )(111 ,, )( ,, 32 2)(23,1,2)     () 13,, 25 12 () 25,, 12 23 (23,,1,2)(12,, 23 1, )(111 ,, )(12 23,1)   () 25,, 12 23 () 12,, 23 1 () 23,1,2 (() 12,1,32 () 1,32,2 (, 111 ,)      (, 111 ,) (, 25 12,) 23 (, 23 12 ,) (, 12 23,) 1    () 32,2,52 (, 111 ,) (2,52,,3)(23,, 12)   A =   () 12,1,32 (, 13 25,) 12 (, 111 ,) (, 25 12,) 23   () 1,32,2 (1 2 23 ,1,32)( 2,2,52)(111 ,, )   LU MU In order to help understand the process of Fuzzy AHP, we possibility of p == VS () ≥ S () SS −− /(() SS 12 12 21 11 took the weight calculation of the three stages as an ML −− () SS )( =− 0.. 2877 0 3376)/ ((0.. 2203−− 0 3376)(0.4576 example. . Similarly, we can derive all the value of −= 0.) 2877 ) 0.1737 The pairwise comparison of the three stages is shown in SS ≥ , and obtain the possibility matrix by Equation (6), ij the fuzzy judgment matrix A. Then the value of fuzzy syn- /. 0 1737 0.5650 thetic extent with respect to the three stages can be derived   by Equations (2) to (4) as follows:   = 1./ 0000 1.0000 where P .   S =⊗ (. 1 9000,. 2 1667,. 2 6667) 1.. 0000 0 6172 /     (. 112 1667,. 19 8333,. 17 9000) According to Equations (7) and (8), the weight vector can W = (. 0 1737,. 1 0000,. 0 6172) be determined as , which can = (. 0156 62,. 0 2203,. 0 3376) be normalized by Equation (9), and the final weight vector S =⊗ (. 3 5000,. 4 5000,. 5 5000) for the three stages is ′ . W = (. 0 0970,. 0 5584,. 0 3446) Taking the same procedure, the weight vector of the risk (. 112 1667,. 19 8333,. 17 9000) indicators with respect to the three stages can also be deter- = (. 0287 77,. 0 4576,. 0 6962) mined. Then, the global weight of each risk indicators can be derived, as shown in Table 9. S =⊗ (. 2 5000,. 3 1667,. 4 0000) With the global weight of indicators determined, we can (. 112 1667,. 19 8333,. 17 9000) apply the method of TOPSIS to conduct the risk assessment of China’s corridors of natural gas importation. By Equations = (. 0205 55,. 0 3220,. 0 5063) (11) to (13), the weighted normalized decision matrix as well SS ≥ Then, the value of possibility of , namely p , can as the positive and negative ideal solutions can be derived, as ij ij be determined by Equation (5). For instance, the degree of listed in Table 10. With Equations (14) to (16), the positive Zhang and Bai 13 Table 9. The Weight of the Risk Indicators Derived by Fuzzy AHP. Stages of gas importation and weights Risk indicators Local weight Global weight External dependence stage 0.0970 I 1 0.0970 Transport stage 0.5584 I 0.3259 0.1820 I 0.2557 0.1428 I 0.0418 0.0233 I 0.1574 0.0879 I 0.0531 0.0297 I 0.1661 0.0928 External supply stage 0.3446 I 0.1611 0.0555 I 0.4145 0.1428 I 0.0774 0.0267 I 0.3470 0.1196 AHP = analytic hierarchy process. Table 10. Weighted Normalized Decision Matrix and the Positive/Negative Ideal Solutions. Corridors and ideal solutions I I I I I I I I I I I 1 2 3 4 5 6 7 8 9 10 11 C 0.0610 0.0000 0.1428 0.0229 0.0000 0.0178 0.0000 0.0000 0.1428 0.0178 0.0580 C 0.0000 0.0165 0.0000 0.0233 0.0000 0.0297 0.0464 0.0479 0.0455 0.0000 0.0000 C 0.0355 0.0513 0.0000 0.0000 0.0220 0.0237 0.0232 0.0555 0.0348 0.0267 0.0112 C 0.0239 0.1820 0.1428 0.0014 0.0879 0.0178 0.0928 0.0404 0.0793 0.0000 0.1048 C 0.0970 0.0497 0.0357 0.0083 0.0659 0.0000 0.0464 0.0227 0.0000 0.0000 0.1196 Z 0.0970 0.1820 0.1428 0.0233 0.0879 0.0297 0.0928 0.0555 0.1428 0.0267 0.1196 Z 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 Table 11. Positive and Negative Euclidean Distances and the C5: Australia/ Southeast Asia- China Proximity of Each Corridor. C4: Middle East/ North Africa- China Parameters C C C C C 1 2 3 4 5 C3: Russia- China i 0.1682 0.1734 0.1803 0.2789 0.2037 − C2: Myanmar- China 0.2803 0.2641 0.2292 0.1517 0.2189 C 0.3750 0.3964 0.4403 0.6478 0.4820 C1: Central Asia- China 0.00 0.20 0.40 0.60 0.80 1.00 and negative Euclidean distances can be calculated, as well Figure 4. Risk Index of China’s corridors of natural gas as the proximity of each corridor to the ideal solutions, and importation. the results were presented in Table 11. As mentioned previously, the Risk Index of China’s cor- ridors of natural gas importation can be represented by the shipping route from Australia and Southeast Asia has a proximity value of each alternative. Therefore, we have medium security level with a Risk Index of 0.48. derived the Risk Index of China’s five corridors of natural Central Asia–China gas pipelines are the most reliable gas gas importation, and the results were presented in Figure 4. It import corridor for China, with a Risk Index of 0.3750. indicates a mid-level security for China’s natural gas impor- Central Asia is among the largest natural gas producers and tation, with an average Risk Index of no more than 0.47. To exporters of the world. In fact, Turkmenistan, Kazakhstan, be specific, the gas pipelines from Central Asia are the most and Uzbekistan, three major Central Asia Countries, are secure and reliable natural gas import routes for this country, home to more than 20 trillion cubic meters of proved gas followed by the gas pipelines from Myanmar and Russia. reserves, which almost equals that in Qatar, and six time of Comparatively, China’s seaborne LNG corridors seem to that in China. The relationship between Central Asia and be riskier than inland corridors of natural gas pipelines. China can date back to the Silk Road that established about Especially, the seaborne LNG corridor from Middle East and 2000 years ago (Christian, 2000). In modern time, China has North Africa is experiencing a Risk Index of 0.65, which is established diplomatic relationships with Central Asian much higher than other corridors, while the seaborne LNG countries when the Soviet Union collapsed in the 1990s. 14 SAGE Open After that, China kept and enlarged its cooperation with them southwest China, which makes the pipelines more expensive in economic integration and fight against separatism, terror- and vulnerable to storms, landslides, and earthquakes (W. D. ism, and extremism (Chung, 2004; Wu & Chen, 2004). China Wang et al., 2009). has built oil pipelines from Kazakhstan in 2006, whose Russia can be a reliable gas supplier for China, with a capacity has been expanded in 2009 (Liao, 2006). However, Risk index of 0.4403. Russia has been proved to be home to China did not stop paying efforts in “energy diplomacy” the richest natural gas reserves and the largest natural gas within this region, and planned to establish four gas pipelines exporter of the world. In fact, China has planned to establish to connect the gas fields in Turkmenistan with gas pipeline gas pipelines from Russia to China since 1990s. However, networks in China, which can deliver at most 85 bcm of nat- their negotiation on the route and price has never reached an ural gas to China every year. Since the Central Asia–China agreement until 2014, when CNPC, the largest oil and gas gas pipelines in this region are half owned by China, which company in China, signed a 30-year, 400 billion USD and can help to keep a close economic and political relationship, annual 38 bcm of natural gas deal with Russian energy giant, this corridor is considered to contribute the most to China’s Gazprom (Weitz, 2014). To complete the gas delivery, Russia energy security. However, this gas import corridor also con- will build a gas pipeline, named Power of Siberia, from its fronts several barriers. First, the main gas supplier in this Kovyktin and Chayandin fields in eastern Siberia to the east- region, Turkmenistan, is far away from China, and the gas ern Sino-Russian border, about 1800 km (Koch-Weser & pipelines have to go through almost the five countries in this Murray, 2014). China will extend it through northeast China region, which increases the financial risks in pipeline con- to the Beijing–Tianjin–Hebei metropolitan area in the north struction and transit fees (Sovacool, 2009). Second, this of China and the Yangtze River Delta in the east (Weitz, region, together with Xinjiang Uygur Autonomous Region 2014). This is a reliable gas import corridor, because it does of China, is facing risks from separatists and Turkism, which not involve the third party, and these two countries kept a may affect the transport security of natural gas along the tight economic and political communication and peaceful pipelines (Kerr & Laura, 2008). borders in recent decades (Hitt et al., 2004). The shortages The Myanmar–China pipeline is built to open China’s for this corridor lie in two points. First, more than 3,000 km access to natural gas import from the southwest, and the of pipelines need to be newly established, and most of them analysis indicates that this is a gas import corridor with mod- will go through the freezing cold Siberia, where frozen soil erate proximity value at 0.3964. This gas corridor has some and low temperature may have some influence on the secu- advantages that distinguish it from other gas pipelines of rity of gas pipelines and shipment. Second, compared with China. First, China has invested on both gas fields’ produc- other cross-border gas pipelines, China does not have any tion and pipelines construction in Myanmar, which means ownership over the pipelines in Russia, which may make it China has ownership over these assets, which can protect gas compromise to Russia in the future gas negotiations. supply in this region. Second, this corridor goes through As to seaborne LNG imports, Australia, Malaysia, and Myanmar to China directly without passing through the third Indonesia used to be China’s main gas suppliers before it country or region, which means less diplomatic and eco- imported pipeline gas from Central Asia. In fact, these three nomic risks. However, after several years of operation, this countries are also among the largest LNG exporters of the pipeline is criticized for its high costs and political risks in world. Compared with other LNG exporters, they have ade- Myanmar. On one hand, the gas fields in Myanmar cannot quate LNG that can be shipped to China by traveling a much keep a stable and sufficient gas production due to its political shorter distance. The shortest distance between China instability and poor economic conditions (Li et al., 2013), Mainland and Australia is about 3,900 km, from the Darwin and the gas price is about 70% higher than that from Port in the northern Australia to Shenzhen Port in Southeast Turkmenistan. On the other hand, the other end of gas pipe- China. Another advantage is that these counties have a very lines is the Southwest China, where natural gas infrastruc- close economic relationship with China. In fact, according to tures and market is really insufficient (Jiang, 2014; Zhai, data from UN Comtrade, China has become their largest 2014). However, the biggest threat is still the political risks business partner during the past several years, and the close in Myanmar. China has signed the gas contract with the for- economic communication can enhance their cooperation in mer military government in Myanmar at the dawn of 21st LNG trade. The risks of this corridor mainly come from geo- century. However, when the national power was transferred politics. Although it does not need to pass through the to the new government in 2010, several projects invested by Malacca Strait, the territorial disputes in South China Sea in foreign companies were shelved by the new president, recent years may produce some influence on the security of including the Myitsone hydropower project (Y. Sun, 2012; freight shipment in this area (BBC, 2016). Besides, as one of Turnell, 2011). Besides, the gas fields and docks can be the world’s busiest international trade routes, South China influenced by local religious conflicts, and the pipelines have Sea and the waters near Indonesia and Philippines are also to go across the northern part of Myanmar, which is still in the most dangerous seas of the world with large amount of civil war (Y. Sun, 2012). Another potential risk for this cor- pirate attacks (Acharya et al., 2015; Graham, 2015). In addi- ridor is that the pipelines must go through the mountains in tion, storms, hurricanes, and running around in the ocean can Zhang and Bai 15 also bring great potential risks to the security of seaborne economic influence, but cannot exert crucial influence on LNG transport (Dillon, 2015). regional political conflicts, although it has paid great efforts Compared with other corridors of natural gas importation, on keeping regional peace, managing conflicts, and seeking the route of LNG shipment from Middle East and North regional security (Chaziza, 2018). Africa to China is the least secure one, mainly due to the long Second, a relative secure situation has been observed for shipping distance. The long transport distance has caused China’s natural gas importation, and the pipeline gas corri- several barriers to the security of natural gas importation and dors are more secure and reliable access for China to convey shipment. The first one is high shipping costs. For example, its natural gas importation than the seaborne LNG shipment. the average landed prices of China’s importing LNG from To be specific, Central Asia–China gas pipelines are thought Australia and Qatar are 0.19 and 0.93 USD/kg, respectively. to be the most reliable and secure corridor for natural gas However, since LNG price is linked to international crude oil importation of China, and the close political and economic market, it is obvious that the huge difference in final costs is relationships between them also enhanced its role in ensur- caused by the shipping and insurance costs (Maxwell & Zhu, ing China’s natural gas importation. The construction of 2011). Second, the long shipping distance means passing Myanmar–China gas pipelines is more like a strategic con- through more transit countries and dangerous waters, and sideration, which can provide China another access to exter- made it more vulnerable to offshore natural disasters. Third, nal energy supply with much shorter transport distance. the Middle East and North Africa is confronted with great However, due to the instability of gas production and geo- geopolitical risks, and the Somali piracy along this route has graphical barriers, this corridor is challenged and questioned brought additional risks (Caldara & Iacoviello, 2016; Malik, by the high gas price and limited gas delivery. The Russia– 2015). Finally, China’s gas companies only own a small China gas pipelines has experienced a long and difficult number of LNG carriers, and most of them are used to deliver negotiation and are expected to deliver gas from late 2019, LNG imports in Asian Pacific regions (China Daily, 2018), then reaching full capacity of 38 bcm by 2025. Russia owns so the LNG shipment from Middle East has to rent foreign about 20% of global natural gas reserves and could be a reli- LNG carriers, which brings extra expenses and risks from able and stable gas supplier of China, while the low tempera- supply disruption. ture and frozen soil brings potential risks to the construction and operation of gas pipelines. The LNG corridor from Australia, Indonesia, and Malaysia can provide China with Conclusions and Discussions large amount of affordable LNG through a relatively short Many risks and factors may affect the security of China’s shipping route. While, the biggest threat to this corridor is corridors of natural gas importation. In this article, it intro- the potential geopolitical conflicts and piracy attacks in duced the situation and trends of China’s natural gas con- South China Sea and nearby waters. Another seaborne cor- sumption and importation, and identified five main corridors ridor, the LNG shipping route from Middle East and North of China’s gas importation. Then, from a perspective of natu- Africa to China has the worst security performance due to ral gas supply chain, it divided the process of natural gas the long shipping distance and complex geopolitical factors importation into three stages: external dependence stage, in Persian Gulf and South China Sea as well as the rampant transport stage, and external supply stage, and proposed 11 piracy attacks. indicators that reflect the potential risks in China’s natural In addition, the diversification strategy of China’s energy gas importation. After that, it aggregated these indicators policy has been proved successful. The importation of natural into a Risk Index for evaluating China’s five corridors of gas in China started from 2006, with a gas import volume of natural gas importation with the hybrid model of Fuzzy AHP 1 bcm, which has grown up to 121.3 bcm by 2018, and made and TOPSIS. From which, we can draw some conclusions. China the largest natural gas–importing country of the world First, among these risk indicators, transport distance is the (British Petroleum, 2019b). With the rapid growth of natural major obstacle for China to enhance its reliable and sustain- gas imports, more countries have been listed as external gas able natural gas importation, followed by risk from stake- suppliers of China (as shown in Table 1), and gas supply holders, resources risk, and political stability of gas suppliers. structure has become more diversified. However, it seems While, transport independence and financial cost seem to that China is overwhelmingly dependent on the gas supply have limited influence on the risks of China’s natural gas from Turkmenistan and Australia, which accounts for more importation. To reduce this risks of China’s natural gas than 55% of China’s total gas imports. With the comple- importation effectively, regional political and economic tion and operation of Russia–China gas pipelines and Line cooperation is needed for China to build a friendly environ- D of Central Asia–China gas pipelines in the near future, ment to acquire natural gas from Central Asia and Southeast Turkmenistan, Russia, and Australia are expected to provide Asia under the initiative of Belt and Road (Huang, 2016; over 75% of gas imports of China. Therefore, a balanced Summers, 2016), and the Central Asia gas pipelines are one strategy is suggested to help reduce the risks of China’s exter- of the main achievements of this initiative. However, in nal gas supply. There are also some other sources that provide Middle East and North Africa, China has proved its natural gas to China, that is, Equatorial Guinea, Nigeria, and 16 SAGE Open Angola in eastern Africa, and Trinidad and Tobago in Latin supply and lack of peaking–shaving capacity of China’s natu- America. However, these sources faced up with great risks in ral gas supply network in winter. Therefore, it is really a top transport distance, political instability, resource endowment, priority for China to complete its domestic gas pipeline net- geopolitical risks, and other risk aspects. works and the gas storage infrastructures. To open up new gas corridor, China turned to the Arctic Acknowledgments Ocean for gas acquisition. A geological-based assessment of the Arctic Circle conducted by the U.S. Geological Survey The authors are grateful to editors and anonymous referees for their indicates that about 30% of the world’s undiscovered gas and very valuable comments and suggestions, which have significantly helped improve the quality of this paper. 13% of undiscovered oil may be found there (Gautier et al., 2009). With global warming, resource exploitation in Arctic Declaration of Conflicting Interests regions become economically and technically feasible, and The author(s) declared no potential conflicts of interest with respect the Arctic sea lanes opening up for longer and longer periods to the research, authorship, and/or publication of this article. each year. In 2018, the first LNG cargo has been shipped to China from Yamal LNG project Russian Arctic region via the Funding Northern Sea Route (Duran, 2018). Which means China has The author(s) disclosed receipt of the following financial support opened up a new gas corridor from Europe and the Arctic, for the research, authorship, and/or publication of this article: which can deliver the LNG imports from Norway and other This research was funded by the Key R&D and Promotion Project Arctic LNG projects to China more efficiently. Although this (Soft Science Research) in Henan Province, China (grant no. LNG corridor has short transport distance, resource abun- 202400410068), the tendering project of Government Decision- dance, no threat from piracy attacks, and less geopolitical Making Research in Henan Province (grant no. 2018B132), the risks, it is still criticized for lack of infrastructure, harsh natu- Key Scientific Research Project of Colleges and Universities in ral environment, and threats from the floating ices and ice- Henan Province, China (grant no. 19A790020), and the Nanhu bergs (Borch et al., 2016; Ghosh & Rubly, 2015). Besides, Scholars Program for Young Scholars of XYNU. development of resources and navigation may accelerate the degradation of Arctic environment (Shapovalova, 2019). ORCID iD Anyway, the LNG corridor through the Arctic has great Long Zhang https://orcid.org/0000-0002-4976-0428 potential for enhancing the security of China’s natural gas importation but still faces issues in international legal sys- References tem, icebreaking LNG carriers, and challenges of harsh natu- Abada, I., & Massol, O. (2011). Security of supply and retail ral conditions. competition in the European gas market: Some model-based Finally, it is urgent to further develop and improve the gas insights. Energy Policy, 39(7), 4077–4088. pipeline networks, LNG terminals, natural gas storages, and Acciaro, M., & Serra, P. (2013). Maritime supply chain security: other gas infrastructures, and enhancing the peak-shaving A critical review. 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Published: Jul 8, 2020

Keywords: risk assessment; natural gas importation; gas pipelines; LNG seaborne shipment; Fuzzy AHP-TOPSIS

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Risk Assessment of China’s Natural Gas Importation: A Supply Chain Perspective

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Risk Assessment of China’s Natural Gas Importation: A Supply Chain Perspective

Risk Assessment of China’s Natural Gas Importation: A Supply Chain Perspective

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