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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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Wednesday, 22 March 23
MARKET INSIGHT - INTERMODAL
The crude tanker market continues to gather momentum as we head towards the end of 1Q2023, against a backdrop of strong U.S. exports paired with a ...
Wednesday, 22 March 23
WILL LOWER GAS PRICES SPARK SWITCHING IN EUROPE AND ASIA?
Record high prices devastated demand for gas and LNG across Asia and Europe last year. But with prices falling, companies are starting to re-evalua ...
Monday, 20 March 23
NTPC MULLS 5.4 MILLION TONNES COAL IMPORT IN FIRST HALF OF 2023-24: PTI
State-run power giant NTPC is planning to import around 5.4 million tonnes of coal to meet the supply shortage during the first half 2023-24 fiscal ...
Monday, 20 March 23
S. AFRICA’S EXXARO RESOURCES SAYS COAL PRICES COOLING OFF - REUTERS
South Africa’s Exxaro Resources on Thursday posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warne ...
Saturday, 18 March 23
RUSSIAN LNG EXPORTS TO EUROPE REMAIN HIGH - VESSELS VALUE
Russian LNG exports to Europe remained at very high levels in February at 3.6 million CBM, following a 13 month high in January of 4.1 million CBM. ...
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- Marubeni Corporation - India
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Australian Coal Association
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
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