Page 9 - AsianOil Week 30

AsianOil EAST ASIA AsianOil
325 300 275 250 225 200 175 150 125 100
75 50 25
0
2009 2010
2011 2012
Production
2013 2014 2015 Consumption Imports
2019F
Data: NDRC, NBS, CNPC
China's natural gas balance
™
2016 2017 2018
struggling to replace the fading giant elds in the country’s east. Meanwhile, China needs more gas, regardless of whether it is produced at home or abroad, to fuel the government’s environmen- tal agenda and the switch from coal.
Overseas interests
Wang met with UAE Minister of State and Abu Dhabi National Oil Co. (ADNOC) CEO Sultan Ahmed Al Jaber on July 23 to discuss promoting oil and gas co-operation.
e two countries’ energy ties have deepened over the last ve years, as Beijing
looks to gain access to politically
stable oil and gas reserves in a his-
Source: BP
two have traditionally operated in arms-length to one another.
Indeed, University of International Business and Economics professor Dong Xiucheng, who is also a former independent director of a Sino- pec subsidiary, told independent business pub- lisher Caixin on July 10 that the two companies have long competed with one another. Dong noted that the two had kept their exploration data secret from each other.
e agreement, therefore, underscores the severity of the task the state oil companies face in delivering production gains at a pace that will appease the
torically troubled part of the world. In 2014, ADNOC signed an agreement with CNPC to estab- lish Al Yasat Petroleum, which has limited on and o shore operations, as a 60:40 joint venture. In Febru- ary 2017, ADNOC awarded an 8% interest in Abu Dhabi’s onshore concession to CNPC for a sign-up bonus of $1.77bn. The Chinese energy major then paid around $1.2bn to secure a 10% stake in two o shore concessions under a
40-year agreement with ADNOC.
On July 29, National Petroleum Construction Co. (NPCC) revealed that Al Yasat had awarded it and its partner Petrofac a front-end engi- neering design (FEED) contract for
CNPC’s
investment
pledge in
the domestic
upstream is likely
to be matched
in the coming
years by a greater
government.
While CNPC has committed
to invest CNY5bn ($726.7mn) per year in exploration between 2019 and 2025, Sinopec has pledged to up its exploration and development budget by 30%-50% each year for up to seven years.
the o shore Belbazem Block. e scope of work includes the submission of a FEED package and proposal for the engineering, procurement, con- struction and installation (EPCI) of the facilities.
CNPC’s overseas drive comes even as it shakes up its approach to the domestic upstream scene.
Team-up
The major has agreed to team up with the country’s second largest oil and gas company, state-owned Sinopec, on large-scale upstream exploration. e move is unusual, given that the
with Chinese demand, meaning the international market has had to bridge the gap.
But beyond the country’s obvious energy needs, CNPC’s investments overseas also serve the country’s political agenda. In statement in April, the State Council’s State-owned Assets Supervision and Administration Commission (SASAC) noted that the company was engag- ing in Beijing’s Belt and Road Initiative (BRI) by investing in 50 projects across 19 countries that were involved in BRI. is trend is likely to con- tinue as the central government seeks to build regional and international influence through energy investments.™
CNPC’s investment pledge in the domestic upstream is likely to be matched in the coming years by a greater commitment to its overseas operations. e country is not just securing equity production that can be shipped home but is also devel-
commitment
to its overseas access to much needed oil and gas
oping a trading arm that can secure
operations supplies. Both overseas and domestic production have failed to keep pace
Week 30 31•July•2019 w w w . N E W S B A S E . c o m P9
bcm per year