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TRANSCRIPT
Prepared for IEEJ 28 February 2017
China Gas Market Outlook And
Opportunities for Japan
IEEJ:March 2017 © IEEJ2017
sia-energy.com
China Gas Supply/Demand Overview
Source: SIA Energy
IEEJ:March 2017 © IEEJ2017
sia-energy.com
Content
China Gas Demand
China Gas Supply
China Gas Reform Outlook
Emerging Tier-2 LNG Players in China
Opportunities for Japanese Companies
IEEJ:March 2017 © IEEJ2017
sia-energy.com
China Gas Demand Is Estimated to Exceed 208 bcm in 2016, an 8% Year-on-year Growth
13%
21%
45%
7%
10%
5%
0%
3%
6%
9%
12%
15%
18%
21%
24%
27%
0
25
50
75
100
125
150
175
200
225
2011
2012
2013
2014
2015
2016E
bcm
China Gas Demand by Sector 2011-2016E
Loss
Commercial, public service and other
Transporation
Industrial
Gas power and centralized heating
Residential
% yoy change (r-axis)
Source: SIA Energy
0
2
4
6
8
10
12
14
16
18
20
Pow
er
and c
entr
alized h
eating
Industr
ial
Resid
ential
Tra
nsport
ation
Com
merc
ial, p
ublic s
erv
ice a
nd
oth
er
bcm
Source: SIA Energy
China Gas Demand Change by Sector (2016 vs. 2015)
2016 gas demand incremental is estimated to be 15 bcm, mainly pushed by power and centralized heating sector and recovery of industrial demand thanks to price down since end 2015
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-
5
10
15
20
25
J F M A M J J A S O N D
bcm
2010 2011 2012 2013
2014 2015 2016
Source: SIA Energy created from the NDRC and China Custom data
Demand Hit Historical High in Dec 2016, Showing Stronger Seasonal Characteristics
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
25.0
Dec-1
3
Mar-
14
Jun-1
4
Sep-1
4
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
Mar-
16
Jun-1
6
Sep-1
6
Dec-1
6
bcm
Mainland China Apparent Consumption % Change YOY
Source: SIA Energy created from the NDRC and China Custom data
China Monthly Apparent Gas Consumption China Apparent Gas Consumption Seasonality
Peak-valley monthly difference in 2016 reached 6.6 bcm, 1.1bcm higher than that in 2015.
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Similar Story Will Continue in 2017, and Growth Is Expected to Return to Double-Digit Rate
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
25.0
Resid
ential
Gas p
ow
er
and
centr
alized h
eating
Industr
ial
Tra
nspora
tion
Com
merc
ial, p
ublic
serv
ice a
nd o
ther
bcm
China Gas Demand by Sector 2016E
Source: SIA Energy
Residential
13%
Gas power
and centralized
heating23%
Industrial
43%
Transporation
7%
Commercial, public service
and other
9%
Loss
5%
2017 Gas Demand Forecast by Sector
Source: SIA Energy
Total Demand
232 bcm
Drivers:a) continuing contracted LNG imports pushb) large gas power capacity will come online, especially in Guangdong and Jiangsuc) industrial gas demand and users are cultivated with infrastructure development
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Primary Energy Target of China’s 13th Five-Year Plan
Coal
58%
Oil
17%
Gas
10%
Non-fossil fuel
15%
Source: NDRC, SIA Energy
Total Energy Consumption5 billion tsce
Primary Energy Target in 2020
Coal
64%
Oil
18%
Gas
6%
Non-fossil fuel
12%
Source: NDRC, SIA Energy
Total Energy Consumption4.3 billion tsce
Primary Energy Mix in 2015
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Gas is the Biggest Beneficiary of 13th FYP’s Incremental Energy Consumption
1.5
0.7
2.52.3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Coal Oil Gas Non Fossil Fuels
tsce
Source: NDRC, SIA Energy
Incremental Energy Consumption in 13th Five-Year Plan by Fuel
Non-fuel energy
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China Gas Demand Outlook 2030
0
50
100
150
200
250
300
350
400
450
500
550
2015
2016E
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
2026F
2027F
2028F
2029F
2030F
bcm
China Gas Demand Outlook 2030
Residential Gas power and centralized heating
Industrial Transporation
Commercial, public service and other Loss
Source: SIA Energy
Gov’t Target
IEEJ:March 2017 © IEEJ2017
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Content
China Gas Demand
China Gas Supply
China Gas Reform Outlook
Emerging Tier-2 LNG Players in China
Opportunities for Japanese Companies
IEEJ:March 2017 © IEEJ2017
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0.0%
1.5%
3.0%
4.5%
6.0%
7.5%
9.0%
10.5%
12.0%
0
20
40
60
80
100
120
140
160
2011 2012 2013 2014 2015E 2016E
bcm
Production % yoy change (r-axis)
Domestic Gas Production 2011-2016
Domestic Conventional Gas Production Saw a Moderate Increase in 2016 Amid Low Oil Prices
Source: SIA Energy
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Sic
huan
Oth
er
Xin
jiang
Shaanxi
Guangdong
(off
shore
)
bcm
Source: SIA Energy
2016 Gas Production Change by Province
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China 2017 Gas Supply Growth Will be Led by TOP Imported LNG and Pipeline Gas, and Domestic Shale Gas
200
205
210
215
220
225
230
235
240
2016 G
as S
upply
Conventional O
nshore
Conventional O
ffshore
Tig
ht
Gas
Shale
Gas
CBM
& C
MM
SN
G
Import
ed P
ipeline G
as
Export
ed P
ipeline G
as
Import
ed L
NG
2017 A
ppare
nt
Dem
and
Sto
ck C
hange
2017 R
eal G
as
Dem
and
bcm
/a
Source: SIA Energy
China 2017 Gas Supply Change by Source
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Gas Imports by Source (1/3)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
bcm
Turkmenistan Uzbekistan Myanmar KazakhstanQatar Australia Indonesia MalaysiaYemen Nigeria Trinidad and Tobago EgyptEquatorial Guinea Papua New Guinea Other
Source: SIA Energy created from China Customs data
China Gas Monthly Import by Source
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Gas Imports by Source (2/3)
8.9
2.8
1.7
0.8 0.3 0.2 0.09 0.08 0.07
0.4
(0.04) (0.1) (0.2)(0.3)
(0.4)
(0.9)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
AUS
(L)
UZB
(P)
TKM
(P)
PNG
(L)
USA
(L)
QAT
(L)
EGY
(L)
TTO
(L)
KAZ
(P)
Other
(L)
MMR
(P)
NGA
(L)
IDN
(L)
GNQ
(L)
YEM
(L)
MYS
(L)
bcm
Import Volume Changes by Source (2016 vs. 2015)
Source: SIA Energy created from China Customs data
Imports from Australia ramped up, pushed by the executing of new long-term LNG contracts.
Imports from Uzbekistan resumed in 1Q2016, after several times of interrupting in 2015.
Imports from Turkmenistan increased, contributed by the demand of peak shaving in 1Q and expansion of Central Asia China Gas Pipeline (CACG) line.
China imports the first cargo from US contiguous in this August (registered at China Custom in September).
(P) Pipeline(L) LNG
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LNG Imports from Australia Accounted for 46% of the Total
0
2
4
6
8
10
12
14
16
18
20
mm
tpa
Source: SIA Energy
China Active LNG Contracted Volume by Source (End 2016)
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016
mm
t
Qatar Australia Indonesia
Malaysia Yemen Nigeria
Trinidad and Tobago Egypt Equatorial Guinea
Papua New Guinea Other Total
Source: SIA Energy created from China Customs data
China Annual LNG Imports by Source
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China’s city-gate price regulation follows closely with Central Asian pipeline gas import costs. Imports at Rudong LNG terminal represent the 16% slope oil-indexed contracts signed in seller’s market. Imported LNG became more cost competitive in coastal areas since 2H2015.
Gas Imports Prices Dropped Remarkably Since 2H2015
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-
15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
CN
Y/c
ubic
mete
r
GD/SH Non-residential City-gate Price vs. Imported Gas Cost
GD/SH Non-residential City-gate Price CAGP Imports cost@GD/SH
Imported LNG Cost@Zhuhai Imported LNG Cost@Rudong
Source: SIA Energy created from China Customs data*Imports cost includes VAT and refunds, regasification and transmission cost
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NOCs Marketing Pressure is Mounting: Volume more than Price
0
10
20
30
40
50
60
Active contracted volumeby end 2014
Contracted volume incremental2015-2017
Contracted volume incremental2018-2020
mm
tpa
CNOOC PetroChina Sinopec JOVO ENN Huadian
China Contracted LNG Volumes by Player
Source: SIA Energy* Contracts only include SPAs and HOAs, but exclude upstream equity volume
Near 20 mmtpa contracted volume comes online in the period
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Under the pressure of over 21 mmtpa TOP obligation in 2016, CNOOC has almost halted spot purchase and diverted some cargos to other markets. SIA has observed substantial import increases from CNOOC’s Ningbo, Zhuhai, Fujian terminals this year, indicating the positive results of its negotiation/compromises with downstream clients.
CNOOC: Fulfilling TOP Obligation and Securing Domestic Market Share Is Now Top Priority
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
mm
t
Australia Brunei
Indonesia Malaysia
Norway Papua New Guinea
Peru Qatar
America
CNOOC LNG Monthly Import by Source
Source: SIA Energy, China Customs' data
Australia
52.5%
Brunei
0.4%
Indonesia
15.8%
Malaysia
12.5%
Norway
0.8%
Papua New
Guinea
0.5%Peru
0.8%
Qatar
16.1%
America
0.8%
Source: SIA Energy created from China Customs data
CNOOC LNG Import Mix 2016(16.3mmt)
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PetroChina has less over-contract burden compared with its two NOC peers. It has been active in spot and swap purchase taking the advantage of low spot LNG prices during the non-peak seasons, while pushing Qatar LNG offtake obligation to the winter.
PetroChina: Less Historical Baggage, Active in Spot Purchase During the Non-peak Season
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
mm
t
Australia IndonesiaMalaysia NigeriaOman Papua New GuineaPeru QatarRussia Trinidad and TobagoAmerica
Source: SIA Energy created from China Customs data
PetroChina LNG Monthly Import by Source
Australia
32.9%
Indonesia
2.5%Malaysia
1.0%Nigeria
4.8%Oman
1.1%
Papua New
Guinea
2.8%
Peru
2.3%
Qatar
44.3%
Russia
4.8%
Trinidad
and Tobago
2.2%
America
1.3%
Source: SIA Energy createdfrom China Customs data
PetroChina LNG Import Mix 2016(5.3mmt)
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Sinopec’s minimum TOP volume is approximately 5 mmtpa in 2016, an impossible mission for the company. Sinopec resold part of its contracted cargos to PetroChina, CNOOC and other Asian LNG importers, and played as an aggressive new entrant in domestic market, especially through trucked LNG distribution. Following the commissioning of APLNG Train 2, more resell from Sinopec is expected in 2017.
Sinopec: Deploying Multiple Monetization Routes to Digest the Mounting TOP Volume
0
50
100
150
200
250
300
Dapeng (
CN
OO
C)*
Putian (
CN
OO
C)
Shanghai…
Nin
gbo (
CN
OO
C)
Zhuhai (C
NO
OC)
Tia
njin (
FSRU
)
Yangpu (
CN
OO
C)
Dongguan (
JOVO
)
Caofe
idia
n…
Rudong (
Petr
oChin
a)
Dalian (
Petr
oChin
a)
Shennan (
Petr
oChin
a)
Qin
gdao (
Sin
opec)
Beih
ai (S
inopec)
10,0
00 t
onne
Trucked LNG distribution LNG imports
Source: SIA Energy*Dapeng imports excludes NWSLNG imports, of which most is regasified
Trucked LNG Distribution by Terminal 2016
Australia
45.3%
Papua New
Guinea
54.7%
Source: SIA Energy created from China Customs data
Sinopec LNG Import Mix 2016(3.5mmt)
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Trucked LNG Market Share Rapidly Expand, Competing and Complementing with Pipeline Distribution
5.7%
7.4%
9.5%
0%
2%
4%
6%
8%
10%
0
5
10
15
20
25
2014 2015 2016
mm
t
China Trucked LNG Supply (2014 – 2016)
Land-based LNG Production
Imported LNG via Terminals
Market Share (R-Axis)
Source: SIA Energy
36%
39%
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Higher oil price will be needed to boost investment in domestic unconventional gas, especially coal-based synthetic gas (SNG) & shale gas.
Unconventional Gas Supply Outlook
0
20
40
60
80
100
120
140
2005 2010 2015E 2020F 2025F 2030F 2035F 2040F
bcm
/aCBM CMM Shale Gas SNG Coal Oven Gas
Source: SIA Energy
China Unconventional Gas Production Forecast ($80/b)
0
20
40
60
80
100
120
140
2005 2010 2015E 2020F 2025F 2030F 2035F 2040F
bcm
/a
CBM CMM Shale Gas SNG Coal Oven Gas
Source: SIA Energy
China Unconventional Gas Production Forecast ($50/b)
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China Gas Supply Outlook 2030
(50)
-
50
100
150
200
250
300
350
400
450
500
550
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015E
2016E
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
2026F
2027F
2028F
2029F
2030F
bcm
Uncontracted LNG Imports
Contracted LNG Imports
Contracted Pipeline Imports
Coal Oven Gas
CBM+CMM
SNG
Shale Gas
Domestic Conv Exploration
Offshore Conventional
Onshore Conventional
Gas Exports
Gas Storage
Real Gas Demand
Source: SIA Energy
China 2030 Gas Supply-Demand Balance
13th Five Year Plan Target
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Content
China Gas Demand
China Gas Supply
China Gas Reform Outlook
Emerging Tier-2 LNG Players in China
Opportunities for Japanese Companies
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Current Government Controlled Reference Prices for Non-Residential Pipeline Gas at Provincial Gates
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/ Timeline
Wellhead price
control
Pilot reform in
Guangdong & Guangxi for WEP-2
Nationwide expansion of
oil-linked import parity
netback pricing
Converge base &
incremental non-
residential city gate
prices
Seasonal pricing
emerges; fertilizer feed
gas price deregulated; Pilot reform
of Fujian WEP-3 city gate price
liberalization
Remove of regulated
non-residential city gate
prices national
wide
How China’s Gas Pricing Reform Has Evolved
2011 20132014-
20152016
2017-
2018
Oil-linked Import Parity NetbackCost PlusMarket
Pricing?
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Unfolding Price Reforms in 2016
Revamped pipeline tariff-setting regime with new regulations
Abolished city gate pricing regulation in Fujian: West-East Pipeline (WEP) gas will not be subject to government-set benchmark price, instead, they will be negotiated and determined exclusively by seller and buyer
Introduced market-based rates for storage services & storage gas procurement/sales
Deregulated prices for fertilizer producers
CNPC announced 10-15% city gate price hike during winter season (Nov. 20, 2016 to Mar. 15, 2017)
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Price not subject to government control Price/tariff subject to provincial government control
Price/tariff subject to NDRC control Price/tariff subject to local government control
Next Reforms are Focused on Breaking Three Layers of Supply Monopolies and Regulate Midstream Tariffs
Inter-provincial Pipeline (non-direct supply)
Offshore Gas
Liquefaction/ Compression
Regasification
Unconventional Gas
Unconventional
Gas
Pipeline Gas
Imports
LNG Imports
Transport
Provincial Grid Distribution
Commercial
Power
Industrial
Residential
Inter-provincial Pipeline
(direct supply)
City Gas Distribution City Gas
DistributionTrucked LNG
Terminal Associated Pipelines
Pipeline Imports
Onshore Conventional
No TPA access to NOCpipelines and terminals
Monopoly in Wholesale & Transport
Exclusive Marketing Rights
Source: SIA Energy
Control lifted in Fujian
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Third Party Access to Pipeline/LNG
Terminals
Supply Competition
Price Discovery & Disclosure
Standardized Trading Contract
OTC Brokered Trading
Non-physical Players Enter
Futures ExchangeLiquid Forward
Curves Developed
Indices Derived for Long Term
Contracts
Establishing a Pricing Hub Takes Time and Commitments
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Shanghai Oil & Gas Exchange, Despite Having Strong Government Backing, There is Still a Long Way to Go
Pipeline Tariff Regulation
Establish of Shanghai Exchange
Shanghai Oil & Gas Exchange
International Legal and Language
Environment
No Gov’t Interference in Prices & Free Capital
Flow
Supply Competition
TPA to Infrastructure
Futures Market and
Liquidity
Transparent & Timely
Data
Deregulate Non-
Residential City Gate
Prices
Multiple Gas Sources and Substantial Market Size
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Content
China Gas Demand
China Gas Supply
China Gas Reform Outlook
Emerging Tier-2 LNG Players in China
Opportunities for Japanese Companies
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Supply Source SupplierRisk to Cut
Reasons
Domestic Onshore Conventional Gas
CNPC, Sinopec
• Sichuan sour gas will still grow, but face marketing and infrastructure challenges; Ordos gas may slow due to budget cut
Domestic Offshore Conventional Gas
CNOOC• Existing production will continue, but Liuhua 29-1 and Lingshui deepwater
development may be delayed
CBMCNPC, CNOOC
• Small production, developed infrastructure, but challenging economics under low prices
Shale GasSinopec,CNPC
• Shale gas success has political significance to NOCs• Secured budget and drilling plans
SNGSinopec, CNOOC, Other
• Huge environmental challenges• LNG marketing will be prioritized over SNG; Xin-Yue-Zhe south part will be
first built to market Sichuan gas
Central Asian Pipeline Gas
CNPC• Take or pay, but with Chinese financing, terms will be more flexible• Price is not competitive at Eastern coast at $50/b oil
Myanmar Pipeline Gas
CNPC• Myanmar gas is not competitive at Southwest or South coast• Take or pay, small volume (with phase II delay), pipeline under-utilized
Russian Pipeline Gas (Power of Siberia)
CNPC• Cost is competitive but upstream and financing challenges remain• project will be delayed to post-2022
Contracted LNGCNOOC, CNPC, Sinopec
• Take or pay• Over-contracted, NOCs have to resell at least 2 mmtpa to international
market, or default
Under-construction LNG Terminals
2nd Tier Players
• Demand driven (market pull)• Competitive price
We See a Conflicting Story in LNG Imports
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Who Are the Emerging 2nd-Tier LNG Importers
Who are taking actions ? Who may take actions ?
Gas Power Plants
LPG Distributors/ Oil Players
Integrated Players
City-gas Operators
Provincial Gas Grids
Source: SIA Energy
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Unlike NOCs, Tier-2 Players Are Mostly Downstream Driven
E&P Conven.
Shale Gas SNG
Long Distance Pipeline Storage SSLNG
LNG Imports
LNGDistrib’n City-gas
GasPower
CNPC
Sinopec
CNOOC
Guanghui
ENN
Huadian
Shenzhen Gas
Guangzhou Gas
Beijing Gas
BeijingEnergy
Core operations Developing position Nascent positionLittle presence;
not a focusSource: SIA Energy
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They Come at the Right Timing
Global glut in LNG
Below $5/mmbtu DES spot price during the non-winter seasons
~11.5% slope vs. oil parity contracts signed by the NOCs
Higher level of flexibility in delivery destination, take-or-pay obligation, contract duration, etc.
Domestic reform underway
Anti-corruption campaign handicapped the NOCs
Direct sales is encouraged to bring down end-user gas cost, boost gas consumption
TPA is encouraged by law; further reform is under way
Investment approval for LNG import terminals may be delegated to the provincial gov’ts
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Market Security
Government Support
InfrastructureAccess
Financial Capability
ProfessionalExperience
Second-tier Players
NOCs
Although Tier-2 Players Are Still Weaker than NOCs in Many Perspectives, They Are Learning and Growing Fast
Secured market, often the premium market with high affordability
Close to end users Established distribution channels
Weaker central government support Strong local government support for
bringing supply and infrastructure competition
Local tax payer
Lack of professional team
Undetermined about pricing preference & term vs spot purchase
Prefers HOAs to SPAs to start with
Difficult terminal TPA access Self-operated terminals often have berth
capacity constraints No pipeline access except for provincial grid
companies
Private players have weaker balance sheet and lower credit rating compared to NOCs
But large state-owned power GENCOs have deeper pocketsSource: SIA Energy
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In spite of the low utilization of existing terminals, there were only six TPA cases executed, five of which were Beijing Gas, only one for private player. Major challenges include:1) Very few LNG terminals offer TPA, on ad hoc basis; 2)TPA mostly offered to large state-owned city gas; 3)Facing HQ resistance;4)No regas and pipeline access;5)Windows to private players are offered in lowest demand months.
TPA at Existing LNG Terminals Proved to be Challenging
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
mm
t
Beijing Gas (Australia) Beijing Gas (Egypt)Beijing Gas (Norway) Beijing Gas (Singapore)China Gas (Nigeria) JOVO (Belgium)JOVO (Indonesia) JOVO (Malaysia)
Source: SIA Energy created from China Customs data
Tier-2 LNG Monthly Import 2016
Tier-2 players imported 1.0 mmt LNG in 2016, and most of them is received by JOVO, who owns the Dongguan LNG terminals. Only 5.5 spot cargos were imported via TPA in the whole year, five by Beijing Gas and half by China gas, all via CNPC’s Caofeidian Terminal.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
1
2
3
4
5
6
7
8
9
Dapeng (
CN
OO
C)
Fujian (
CN
OO
C)
Shanghai (C
NO
OC)
Nin
gbo (
CN
OO
C)
Zhuhai (C
NO
OC)
Tia
njin (
CN
OO
C)
Hain
an (
CN
OO
C)
Dongguan (
JOVO
)
Tangshan (
CN
PC)
Jiangsu (
CN
PC)
Dalian (
CN
PC)
Shennan (
CN
PC)
Qin
gdao (
Sin
opec)
Beih
ai (S
inopec)
mm
t
Unutilized Capacity Import volume Annual utiliazation rate (R-axis)
Source: SIA Energy created from China Customs data
2016 Utilization of China LNG Terminals
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In Addition to the Three Under Construction Tier-2 LNG Terminals, Many More Have Been Proposed
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Questions From the Sellers: Who Are Ready to Sign SPAs? What’s Their Purchasing Power?
HO
A &
SP
A
Se
cu
red
Terminal
Preparation
Site selection
and market study
Provincial level approval
NEA approval (for large-
scale greenfield)
Under construction Commissioning
1 m
mtp
a2
mm
tpa
3 m
mtp
a
1 mmtpa 20-yr SPA with BP 1 mmtpa 10-yr HOA with Chevron 0.6 mmtpa equity entitlement from PNW 0.5 mmtpa 20-yr HOA with PETRONAS
0.65 mmtpa 10-yr SPA with Chevron 0.5 mmtpa 10-yr SPA with TOTAL 0.28 mmtpa 5-yr SPA with Origin
0.5 mmtpa 5-yr SPA with PETRONAS
0.5 mmtpa 5-yr KTA with Chevron
0.5 mmtpa 5-yr HOA with PETRONAS
1 mmtpa 20-yr HOA with Pacific Oil & Gas
10 spot cargo from Engie
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Content
China Gas Demand
China Gas Supply
China Gas Reform Outlook
Emerging Tier-2 LNG Players in China
Opportunities for Japanese Companies
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Service / Presentation Name ◦ Page 41sia-energy.com
Japan and China Share Critical Common Ground and Have Opportunities to Collaborate Along the Entire Value Chain
• Domestic energy
security concern
as large importer
• Domestic market
reforms
• Over-contracted
LNG and desire
for contract
renegotiation
• Overseas value
chain
participation
• Regional
development
opportunities
• Regional pricing
hub
China• Growing
domestic gas consumption
• Large domestic production
• More diversified gas sources
Japan• Better financial
credit • More experience in
international trade• More experience in
liquefaction• Clean technology
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Service / Presentation Name ◦ Page 42sia-energy.com
Chinese Market
Regional Market
Regional Hub
Opportunities in Physical and Paper Trading
Regional pricing
Paper market
Forward curve and price index
LNG re-distribution
Contract re-negotiation
FOB/US tolling model
Spot LNG trading
Small terminal demand aggregator
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