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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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Friday, 23 September 22
CHINA DIGS DEEP TO RAISE COAL OUTPUT TO RECORD HIGH - REUTERS
China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassin ...
Friday, 23 September 22
EUROPEAN STEEL BUYERS SEEK DIRECTION IN VOLATILE MARKET - MEPS INTERNATIONAL
Demand for steel is slow to recover, after the summer break. Mill production costs continue to increase. Steel purchasers are uncertain about the f ...
Friday, 23 September 22
BUOYANT COAL INDUSTRY SEEKS WAYS TO STAY IN THE LONG-TERM ENERGY MIX - REUTERS
There’s no doubt that the global coal industry has been a major beneficiary of Russia’s invasion of Ukraine and the subsequent energy c ...
Friday, 23 September 22
MARKET INSIGHT - INTERMODAL
In view of the forthcoming winter, Europe is trying to escape from its energy (oil & gas) dependency from Russia to ensure energy abundance eve ...
Tuesday, 20 September 22
CHINA'S DAILY COAL OUTPUT HITS 3-MONTH LOW IN AUGUST ON RAINS, COVID CURBS - REUTERS
China’s daily coal output in August slipped to a three-month low as some mines in its biggest coal mining regions reduced operations or even ...
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- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Australian Coal Association
- The University of Queensland
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- CNBM International Corporation - China
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Planning Commission, India
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
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