China Oil & Gas Report Q3 2012

Date: June 19, 2012
Pages: 119
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

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BMI View: While China is increasingly dependent on imported oil and gas owing to rapid growth in energy demand, there is upside risk in terms of its domestic resources, particularly in view of shale gas and oil potential. A more open relationship with foreign partners could also greatly reduce exposure to the import market. In the meantime, oil and gas demand risk could surprise to the downside if market reform continues and economic expansion comes under pressure.

The main trends and developments we highlight for China’s Oil and Gas sector are:
  • Much of the country’s upside production potential is provided by the Tarim field, for which state company China National Petroleum Corporation (CNPC) has set the ambitious target of increasing oil production from around 115,500 barrels per day (b/d) in 2011 to almost 600,000b/d in 2020. Although we are cautious about this target, we expect Chinese production to rise over the next few years, peaking at 4.46mn b/d in 2016 before declining to 4.34mn b/d in 2021.

    A report by China's Ministry of Land and Resources has estimated China's technically recoverable shale reserves at 25.1trn cubic metres (tcm), significantly lower than the 36.1tcm estimate made by the US Energy Information Administration (EIA) in April 2011. The discrepancy reflects the limitations of resource estimations at such an early stage of appraisal. Further changes in reserves estimates are therefore likely as operators' understanding of China's various shale basins improves. The ministry's report considered a number of barriers to realising this vast shale gas potential. In particular, it highlighted China's complicated geology and lack of domestic technological expertise.

    The National Development and Reform Commission (NDRC) has submitted plans to overhaul China’s current refined fuel pricing scheme to the state council. The reforms, according to a Reuters report, would raise retail fuel prices by making them more reflective of international crude prices. The move would limit refiners' losses and might even allow them to make small profits. Higher fuel costs could weaken the impressive trend in oil demand growth which would benefit the Chinese economy.

    However, in January 2012, the China Petroleum and Chemical Industry Federation estimated that apparent crude consumption will increase by 5.3% y-o-y in 2012. BMI forecasts that Chinese oil demand should reach 12.54mn b/d by 2016. Consumption is put at 14.69mn b/d by 2021.

    Crude imports alone are expected to cost China some US$268.3bn in 2012, which could climb to US$304.8bn in 2016. Some refined product imports are also expected during the period, reflecting a shortfall in adequate domestic capacity. Net gas imports are expected to rise to 80.8bn cubic metres (bcm) in 2016, costing some US$39.8bn, using BMI base case assumptions. This suggests a total oil and gas import bill of US$344.6bn by 2016. At the time of writing we assume an OPEC basket oil price for 2012 of US$111.47/bbl, falling to US$107.00/bbl in 2013.
  • Executive Summary
    SWOT Analysis
    China Oil and Gas SWOT
    Global Energy Market Outlook
      Table: Oil Production Forecasts, 2010-2016 (’000b/d)
      Table: Oil Consumption Forecast, 2010-2016 (’000b/d)
    Regional Energy Market Outlook
    China Energy Market Overview
      Table: China – Upstream Project Database
    Industry Forecast Scenario
      Table: China Oil & Gas – Historical Data And Forecasts, 2009-2016
      Table: China Oil & Gas – Historical Data And Forecasts, 2014-2021
    Oil And Gas Reserves
    Oil Supply And Demand
    Gas Supply And Demand
    Unconventional Gas
    Refining And Oil Products Trade
    Revenues/Import Costs
    Key Risks To BMI’s Forecast Scenario
    Oil And Gas Infrastructure
    Oil Refineries
      Table: Refineries In China Of Over 200,000b/d Capacity
    Oil Storage Facilities
      Table: China’s Strategic Petroleum Reserve
      Table: China’s Commercial Oil* Storage Capacity
    Oil Pipelines
    Coal-To-Liquids (CTL) Plants
    LNG Terminals
      Table: LNG Terminals In China
    Gas Storage Facilities
    Gas Pipelines
    Regional and Country Risk/Reward Ratings
      Table: Upstream Risk / Reward Ratings
      Table: Downstream Risk / Reward Ratings
    China Upstream Rating – Overview
    China Upstream Rating – Rewards
    China Upstream Rating – Risks
    China Downstream Rating – Overview
    Competitive Landscape
      Table: Key Players – Chinese Oil And Gas Sector
    Overview/State Role
    Licensing And Regulation
    Government Policy
    Licensing Rounds
    International Energy Relations
      Table: Key Upstream Players
      Table: Key Downstream Players
    Company Monitor
    China National Petroleum Corporation (CNPC)
    China Petroleum & Chemical Corporation (Sinopec)
    China National Offshore Oil Corporation (CNOOC)
    Shell (China) Ltd
    BP China
    ExxonMobil China
    Husky Energy
    ConocoPhillips – Summary
    Eni – Summary
    BG Group – Summary
    Others – Summary
    Asia – Regional Appendix
      Table: Oil Consumption, 2009-2016, (bbl)
      Table: Oil Consumption Long-Term Forecasts (bbl)
      Table: Oil Production, 2009-2016, (’000b/d)
      Table: Oil Production, Long-Term forecasts, (’000 b//d)
      Table: Refining Capacity, 2009-2016 (’000b/d)
      Table: Refining Capacity Long-Term Forecasts
      Table: Gas Production, 2009-2016, (bcm)
      Table: Gas Production Long-Term forecasts, 2014-2021, (bcm)
      Table: Gas Consumption, 2009-2016, (bcm)
      Table: Gas Consumption Long-Term forecasts, 2012-2021, (bcm)
      Table: LNG Exports (bcm), 2009-2016
      Table: LNG Exports (bcm), 2009-2016
    Methodology And Risks To Forecasts
    Glossary Of Terms
      Table: Glossary of Terms
    Oil And Gas Risk/Reward Ratings Methodology
    Ratings Overview
      Table: BMI’s Oil & Gas Business Environment Ratings – Structure
      Table: BMI’s Oil & Gas Upstream Ratings – Methodology
      Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology
    BMI Methodology
    How We Generate Our Industry Forecasts
    Energy Industry
    Cross checks
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