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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, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
Wednesday, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
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- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- PTC India Limited - India
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Aditya Birla Group - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
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