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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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- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
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