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August 9, 2018

Energy firms to boost investments in Chinese oil and gas

Following the instruction from President Xi Jinping to boost national energy security, a group of major Chinese energy companies has pledged to expand their domestic oil and gas production, with a greater focus on natural gas supplies, in particular.

By Talal Husseini

Following the instruction from President Xi Jinping to boost national energy security, a group of major energy companies has pledged to expand Chinese oil and gas production, with a greater focus on natural gas supplies, in particular.

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China National Offshore Oil Company (CNOOC) said it aims to boost domestic oil and gas reserves as part of a ten-year plan to reach an annual output of 30 million tonnes at its Baohai Bay fields.

CNOOC joint company secretary Li Jiewen said: “[in implementing top-level instructions] companies will follow their own development characteristics and proceed with plans accordingly.”

China currently has the world’s highest energy consumption rate and is also the largest oil importer, but domestically the country is facing declining reserves and soaring development costs at proven oilfields.

In response to Xi’s call, the China National Petroleum Company said it would focus on fast-tracking investments in natural gas production and infrastructure, including underground storage.

The Chinese natural gas industry suffered a shortage last winter as Beijing’s gasification drive increased demand at a much faster rate than domestic fields could supply. Gas deliveries were delayed by a lack of pipeline and storage infrastructure.

The International Energy Agency estimated that natural gas imports made up 45% of China’s total consumption in 2017. Rapid growth in the demand for imports could see China overtake Japan as the world’s largest importer of natural gas, as early as this year.

Chinese oil and gas tariffs

The expansion of domestic oil and gas comes at a time when China is embroiled in a trade war with the US.

The threat of $60bn tariffs on US imports is likely to impact the Chinese oil and gas sector, and as Xi is currently looking to natural gas as a way to clean up its air pollution, it is becoming a politically sensitive issue.

The US is currently the top producer of natural gas and its LNG exports are said to be growing, with the government hoping to turn the country into an energy superpower.

Verisk Maplecroft senior Asia analyst Hugo Brennan said an implemented tariff on LNG imports would “deal a serious blow to the US gas industry and President Trump’s ‘energy dominance’ agenda”.

Brennan added: “Chinese gas demand forecasts are underpinning a raft of proposed LNG export terminals along America’s East Coast, which align with the Trump administration’s bid to turn the US into an energy superpower. But some of these projects will struggle to attract financing if [China] goes ahead and raises tariff barriers on US LNG.”

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Free Report
img

How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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