China’s Outbound Foreign Direct Investment In Russian And Australian Gas Industries

Due to economic development,market reforms,energy diversification,infrastructure expansion,and environmental regulations designed to minimize air pollution and carbon emissions,the International Gas Union expects that China will make up 12 percent of global natural gas demand by 2040.Despite an increase in domestic production,China is currently unable to cover the growing needs of its national economy completely.Some of the world’s largest natural gas exporters,such as Russia and Australia,are willing to cooperate with China in terms of gas.To fill the widening gap between its domestic production and consumption,China has also relied on increasing natural gas imports and investments in pipelines and LNG(liquefied natural gas)facilities outside China.The international community of scholars has well-studied China’s pivot towards increasing gas consumption and Chinese investment in global energy.However,there is still a gap in the study of China’s OFDI(outward foreign direct investment)in the gas sector,including its drivers,volumes,destinations,investment projects,significant investors,entry modes,and policy implications.To secure China’s outward natural gas investment,it is necessary to identify the possible risk factors.Theory-wise,this work is guided by the theoretical risk model used by Zhang and Bai.The two scholars devised indicators,which herein serve as variables.Among the crucial ones selected to assess the case studies are relationship with the host country,government policy in the recipient states,transport distance and independence,relationship with exporting and transit countries,financial risks,and resource risk.The contribution of this research is by conducting a narrower comparative case study analysis of two critical cases: Russia and Australia.A general discussion on China’s natural gas import and investment in the gas sector abroad without focusing on any specific country is provided in the first chapter.This is followed by case study analyses of Russia and Australia’s gas industries in the second and the third chapters,respectively.The focus is on the history of their economic relations with China,gas trade volumes,annual data on Chinese investment,latest gas projects invested by Chinese companies,as well as the main challenges faced by both Chinese investors and host parties.In the final concluding part,there is an assessment of the two case studies based on the previously identified risk factors from the theory.Chinese investment in the gas industries of Russia and Australia tells us that the main factors driving China’s outward FDI strategy in the energy sector are: strong political and economic ties with Beijing,a stable political regime and a favorable climate for foreign investment in the recipient state,a project’s location on a gas field with large natural gas reserves and sophisticated gas infrastructure,as well as a connection with China by a safe transportation route.