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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 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- The University of Queensland
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
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