china gas market briefing...2019/05/14 · prepared for aperc annual conference 2019 15-16 may 2019...
TRANSCRIPT
Prepared for APERC Annual Conference 2019 15-16 May 2019
China Gas Market BriefingFareed Mohamedi,Managing Director, SIA-Energy International
Page 2sia-energy.com
16% real gas consumption growth continues in 2018
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
0
25
50
75
100
125
150
175
200
225
250
275
300
2009
2010
2011
2012
2013
2014
2015
2016
2017E
2018E
bcm
Power and Centralizaed Heating IndustrialTransportation ResidentialCommercial, Public Service And Other LossIncremental demand growth YoY (R-axis)
Source: SIA Energy
China Gas Demand by Sector
China gas real consumption
Page 3sia-energy.com
China’s “demand shock” pushes up JKM prices; energy security is back to government agenda
0
1
2
3
4
5
6
7
8
0
2
4
6
8
10
12
14
16
Dec-1
5
Feb-1
6
Apr-
16
Jun-1
6
Aug-1
6
Oct-
16
Dec-1
6
Feb-1
7
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
Dec-1
7
Feb-1
8
Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
Dec-1
8
mm
t
$/m
mbtu
China Monthly LNG Imports Volume TTF NBP *Brent JKM
* Represent oil-parity pricesSource: SIA Energy
Major LNG/Gas Prices vs China Monthly LNG Import Volume
Page 4sia-energy.com
SIA Argument:
1. Coal-to-gas switch policy mandate to northern Chinese cities (2+26) started in 2012, not 2017.
2. All fuels in primary energy grew in 2017-18 including coal, which reversed previous downward trend.
3. High double digit growth is a combined effect of economic boom and politicized “CTG campaign”——industrial upgrade and urbanization are still the fundamental drivers, but environmental mandates and government interference in supply and pricing are the “accelerators”, which partially advanced future demand growth.
Myth 1: China’s two consecutive years of high demand growth was driven by coal-to-gas switch policy single-handedly
-20%
-10%
0%
10%
20%
30%
40%
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan-1
7
Feb-1
7
Mar-
17
Apr-
17
May-1
7
Jun-1
7
Jul-
17
Aug-1
7
Sep-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan-1
8
Feb-1
8
Mar-
18
Apr-
18
May-1
8
Jun-1
8
Jul-
18
Aug-1
8
Sep-1
8
Oct-
18
Nov-1
8
Dec-1
8
Coal Petroleum Natural Gas Non-fossil
Source: SIA Energy, the NBS, China Customs
China Monthly Primary Energy Consumption Growth
Page 5sia-energy.com
SIA Argument:
1. Summer 2018 was a demand-pull story (2017 summer policy-push & demand-pull). City gas enjoyed higher (20-30%) growth compared to gas-fired power and other large industries due to supply constraints.
2. Summer LNG imports were driven by(1)CNPC reshaped term LNG delivery curve towards winter-heavy and spaced out summer for spot LNG imports; (2) Northern China CTG program continues, and central government mandated NOC supply security at all cost, curtailment for the rest of China started in Q2.
3. CNOOC has no UGSs to store gas for winter. Sinopec Wen23 was ready for injection of cushion gas but was short of gas supply until Q4. SIA estimated total off-peak months injection volume of 9 bcm and net injection of 2-3 bcm in 2018.
Myth 2: China imported record LNG in the summer to fill underground storages in order to prepare for winter
0%
5%
10%
15%
20%
25%
30%
35%
0
2
4
6
8
10
12
14
bcm
1H2017 1H2018 Yoy Growth
Source: public information disclosure of the companies
Gas Sales Volume by Major City Gas Distributor (1H2017 vs 1H2018)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Jan-1
6
Mar-
16
May-1
6
Jul-
16
Sep-1
6
Nov-1
6
Jan-1
7
Mar-
17
May-1
7
Jul-
17
Sep-1
7
Nov-1
7
Jan-1
8
Mar-
18
May-1
8
Jul-
18
Sep-1
8
Nov-1
8
City Gas Industrial Fuel Gas Power Chemicals
Source: Henan Energy Administration
Henan Monthly Piped Gas Demand by Sector
Page 6sia-energy.com
SIA Argument:
1. 4Q2018 China LNG imports grew 33% yoy, no sign of slow down whatsoever.
2. However, due to CNPC’s pre-contracted winter term LNG and increased pipeline supply, trucked LNG prices did not hike as the previous winter; lacking pipelines & UGS, CNOOC’s trucked LNG distribution experienced glut.
3. CNOOC’s market share in LNG imports drastically reduced from 53% in September to 42% in November, causing defers and cancellation of CNOOC spot cargos, on the contrary, CNPC’s share in LNG imports went up by 9% in same months.
Myth 3: China’s winter gas demand slowed and LNG imports stagnant
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
J F M A M J J A S O N D
mm
t
China LNG Imports Seasonality
2015 2016 2017 2018
Source: SIA Energy created from China Customs data
53%
48%
56%
57%
51%
54%
51%
52%
53%
47%
42%
48%
33%
33%
26%
22%
25%
28%
30%
29%
23%
31%
32%
28%
0% 20% 40% 60% 80% 100%
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
CNOOC CNPC Sinopec Tier-2
Source: SIA Energy
NOCs and Tier-2's Shares in LNG Imports
Page 7sia-energy.com
Incremental supply mainly came from LNG imports and domestic production, especially shale gas and tight gas
Page 8sia-energy.com
Real demand is expected to reach 330 bcm and 510 bcmrespectively in 2020 and 2030
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017E
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
2026F
2027F
2028F
2029F
2030F
bcm
Power and heating Industrial Transportation
Residential Commercial & Public Services Loss
Demand growth YOY (R)
China Gas Demand Forecast 2030
Source: SIA Energy
13th FYP Target
Page 9sia-energy.com
(50)
-
50
100
150
200
250
300
350
400
450
500
550
bcm
Source: SIA Energy
China Gas Supply-Demand Balance
To meet future demand, China will have to sign new long term LNG contracts and help FID of new liquefaction capacity
Onshore & Offshore Conventional
Unconventional
Pipeline Gas Imports
LNG Imports
7.9
14.5
16.0
20.0
37.4 42.5
0
10
20
30
40
50
60
70
80
90
100
mm
tpa
China Imported LNG Forecast
Spot & Future Term Contracts
Tier-2 Players' Term Contracts
NOC LNG Term Contracts Signed in 2018
NOC LNG Term Contracts as of End-2017
Source: SIA Energy
Page 10sia-energy.com
NOCs still have dominant position (95%) in total gas supply
CNPC
63%
Sinopec
13%
CNOOC
19%
Other
5%
Source: SIA Energy
2018 China Gas Supply by Company (Including Supply to Hong Kong and Macao)
Total285 bcm
-50
0
50
100
150
200
CNPC Sinopec CNOOC Other Exports to
HK & Macau
bcm
Domestic Supply Imported Pipeline Gas
Imported LNG Exported Pipeline Gas
Source: SIA Energy
2018 Gas Supply by Company & Source
Page 11sia-energy.com
After three years of absence, Chinese NOCs are back to LNG market for term deals
mm
tpa
Three Chinese NOCs Term Contract Signed Year and Peak Contract Volume
2nd round buying spree?
1st round buying spree in seller’s market
Absent in buyer’s market
CNOOC enters LNG space in buyer’s market
Page 12sia-energy.com
CNOOC—looking for diversified incremental supply at smaller and shorter contracts to create flexibility
0
5
10
15
20
25
30
35
40
45
50
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
mm
tpa
CNOOC & JV LNG ReceivingCapacity
60% Capacity
North West Shelf
Qatargas (CNOOC)
Tangguh LNG
Malaysia LNG
TOTAL Portfolio (CNOOC)
GDF SUEZ Portfolio
Shell (former BG)
Shell Portfolio
BP Portfolio (CNOOC)
Woodfibre LNG (CNOOC)
Real Import (Including Spot)
Source: SIA Energy
CNOOC Contracted Volume vs. Real Imports vs. Terminal Capacity
Page 13sia-energy.com
CNPC—turning winter spot demand into terms in the near term, while leaving long term market for future equity lifting
0
5
10
15
20
25
30
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
mm
tpa
CNPC & JV LNG ReceivingCapacity60% Capacity
Qatargas (PetroChina)
Shell Portfolio
Gorgon LNG
Yamal LNG
PNG LNG (PetroChina)
Sabine Pass/Corpus Christi LNG
US LNG A
Qatargas (PetroChina)
IOC A
IOC B
LNG Canada
Yamal LNG Expansion
Rovuma LNG
Browse Upstream ExpansionSource: SIA Energy
CNPC Contracted Volume vs. Real Imports vs. Terminal Capacity
Page 14sia-energy.com
Sinopec—eager to play catchup and diversify its supply portfolio
0
5
10
15
20
25
30
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
mm
tpa
Sinopec & JV LNGReceiving Capacity
60% Capacity
Australia Pacific LNG
PNG LNG (Sinopec)
Real Import (IncludingSpot)
Source: SIA Energy
Sinopec Contracted Volume vs. Real Imports vs. Terminal Capacity
Page 15sia-energy.com
Tier-2 Chinese LNG Players by Peer Group
Who are taking actions ? Who may take actions ?
Gas Power Plants
LNG/LPG Distributors
Oil Traders / Refineries
City-gas Operators
Provincial Gas Grid/ Provincial Energy
Zhejiang Energy GEG Hebei Construction Invt
Beijing Gas Shenergy Guangzhou Gas Shenzhen Gas
ENN China Gas
Huadian Beijing Energy GCL
Guanghui Hanas HuafengJOVO
Baota Petchem Zhenhua Oil Dongming Petchem
Huaneng
China Resources Gas TownGas
Shenzhen Energy
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