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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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Tuesday, 29 November 22
SEABORNE COAL FLOWS IN 2022 - SIGNAL
This year is crucial for the energy mix in European countries, as the EU has imposed new sanctions on Russia. It is important to emphasize that the ...
Friday, 25 November 22
APAC THERMAL COAL PRICES CORRECT FROM RECORD HIGH - FITCH RATINGS
Prices of Newcastle 6,000kcal/kg coal have corrected following falling European gas and coal prices, and more supply from Australia could help miti ...
Thursday, 24 November 22
VIETNAM BOOSTS COAL USE PLAN FOR 2030 AS G7 CLIMATE OFFER STALLS - REUTERS
Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen by Reuters show, while renewables ...
Tuesday, 22 November 22
THE GENCON 2022 CHARTERPARTY - GARD
KNOWLEDGE TO ELEVATE
BIMCO has published a revamped version of the popular GENCON charterparty. Our author, Helena Biggs, was a member of the ...
Tuesday, 22 November 22
INDIA POWER BINGES ON COAL, OUTPACES ASIA - REUTERS
India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine ...
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- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Economic Council, Georgia
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Independent Power Producers Association of India
- PTC India Limited - India
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- GMR Energy Limited - India
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