Page 10 - AsianOil Week 02

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The project, which is developing the South Tambey field’s resources, has 926bn cubic metres of estimated proven and probable (2P) gas reserves.
On December 11, Yamal LNG announced the start-up of the 15th and final Arc7 ice- class tanker built for the project. Each vessel in the fleet is 299 metres long, has a capacity of 172,600 cubic metres and can break through two-metre thick ice. The project said the fleet would not only be able to deliver all of
the output from the first three trains, which are understood to be running above capacity, but would also be able to transport the fourth train’s additional output.
Business Korea reported on January 9 that while Russian shipyard Zvezda had won orders for a fleet of 15 Arc7 vessels to service Novatek’s Arctic LNG 2 project, Samsung Heavy Industries (SHI) was expected to be selected as the preferred yard for an additional 10 such vessels.™
China unveils upstream reform
POLICY
The sluggish
growth of oil and
gas production
in China was
partly due to the
monopolistic
nature of the
upstream
segment
Dennis Ip
Head of research Daiwa Capital Markets
THE Chinese government has unveiled plans to allow foreign and private companies to explore and develop the country’s oil and gas resources without the need for partnerships with state- owned developers.
The Ministry of Natural Resources said on January 9 that locally registered companies with CNY300mn ($43.4mn) of net assets would be allowed to operate independently in the upstream from May 1.
The ministry said exploration permits would last for an initial five years and that there would be an option to extend this period by another five years as long as the company was willing to relinquish 25% of the original licence’s land. The reform will also see the government award all oil and gas licences under competitive bid rounds and tenders. This will allow the private sector to compete on a level playing field with state rivals.
Under the current rule set, foreign compa- nies require a Chinese partner, typically a state- owned major, to enter the upstream. The Big Three – PetroChina, CNOOC Ltd and Sinopec – control the vast majority of the country’s oil and gas acreage. Exploration risk in such part- nerships is invariably carried by the foreign com- pany, with the state partner reserving the right to back in to a 51% stake in the licence should a commercial discovery be made.
Reuters quoted an unnamed official as say- ing the reform would force the country’s state- owned firms to part with some of their land.
“Compared to previous measures of explora- tion work commitment, the new rule makes the acreage transfer more efficient and compulsory,” the source said.
The reform comes as China’s dependency on foreign oil and gas supplies increases. China’s oil imports in the first 11 months of 2019 expanded by 10.4% year on year to 461.88mn tonnes (10.14mn barrels per day (bpd)), according to General Administration of Customs (GAC) data. Imports of piped gas and liquefied natu- ral gas (LNG) combined climbed 7.4% y/y to 87.11mn tonnes.
“The sluggish growth of oil and gas produc- tion in China was partly due to the monopolistic nature of the upstream segment,” Daiwa Capi- tal Markets’ head of research, Dennis Ip, told Bloomberg. “The government’s intention is to introduce competition and encourage techno- logical innovation in the E&P segment and we believe this can help to lower the production costs of upstream players over the long run.”
While the reforms are anticipated to help breed competition in the domestic upstream, the latter may not immediately attract signifi- cant new waves of foreign investment given that the state majors already hold the majority of the most prospective land.
Instead, China’s domestic developers and oilfield service providers have more to gain, IHS Markit’s Beijing-based associate director of upstream research, Zhu Kunfeng, told Reuters.™
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w w w. N E W S B A S E . c o m Week 02 15•January•2020