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Thursday, 22 May 14
CNPC-GAZPROM DEAL A MEDIUM - TERM POSITIVE FOR CHINA'S GAS SECTOR
 Fitch Ratings says a 30-year deal in which Russia's OAO Gazprom (BBB/Negative) will supply gas to China National Petroleum Corporation (CNPC; A+/Stable) underscores CNPC's strategic role in the country's gas pipeline infrastructure and helps China to secure adequate gas supply over the medium term, especially for the north-eastern part of the country.
Under the deal, Gazprom will supply 38 billion cubic metres (bcm) of gas a year starting around 2018 at a price that sets a new benchmark for what China is willing to pay for natural gas over longer term contracts.
The agreement also demonstrates China's determination to switch to cleaner energy. China used around 168bcm of natural gas in 2013 and aims to use over 400bcm in 2020. The import agreement will meet close to 10% of China's consumption of natural gas in the medium term. Although China has substantial gas resources, exploiting the large unconventional reserves is technologically challenging. In 2013, the country imported nearly 30% of its gas requirement. We expect imports to increase as a share of total consumption in the medium term.
The new deal helps diversify the sources of China's natural gas imports, now mainly Turkmenistan and shipments of liquefied natural gas (LNG). It follows an agreement by CNPC in 2013 to take an equity stake in a Russian LNG project and buy gas from the project, which is controlled by Russia's OAO Novatek (BBB-/Stable).
While pricing for the Gazprom deal has yet to be announced, it appears from numbers reported in the media that the price will likely be at or above USD350 per thousand cubic metres (CNY2.2 per cubic meter), which is about 60% cheaper than China's current LNG imports and similar to the price for imports from central Asia. Although Fitch does not expect LNG imports to fall significantly because the use of natural gas in China is increasing, the agency believes the Gazprom deal will help reduce upward pressure on import prices in the medium term.
China has been and will continue to increase domestic gas selling prices that are controlled by the state, which should ensure profitability for operators like CNPC. For example, following gas price increases to-date, CNPC reported profits in its mid-stream gas operations in 4Q14 after losses during which high import costs sapped profitability.
For domestic gas producers, the Gazprom deal will provide incentive to further invest in natural gas exploration and production because the deal's expected price is higher than domestic production and as the authorities are expected to liberalise domestic natural gas pricing in the next couple of years. The indicative Gazprom deal price is at least 40% more than the current spot price for domestic gas, which ranges from CNY1 to CNY1.6 per cubic meter. Fitch believes the Gazprom deal is positive for CNPC, which holds over 60% of China's gas reserves and whose realised natural gas prices from its domestic productions in 2013 were around USD180 per thousand cubic metres.
CNPC will be responsible for building the pipelines and storage facilities in China under the deal. That the state has tasked CNPC to take on such important responsibility indicates that CNPC continues to play a strategic role in China's gas infrastructure, even though its subsidiary PetroChina said in May 2014 that it would eventually sell all of its stake in the First and the Second West-East Gas Pipeline to private investors.
To domestic city gas operators, especially in the north-eastern region, the deal soothes the concerns about gas supplies over the medium term. In Fitch's view, the agreement is positive for city gas operators such as China Resources Gas (BBB+/Stable), ENN Energy (BBB/Positive) and China Gas Holdings.
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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Australian Coal Association
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Central Electricity Authority - India
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
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