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For the complete report, get in touch with us at: [email protected] Abstract: Netscribes latest market research report titled Oil and Gas Market in China 2014 states that the market is expected to witness rapid growth owing to high untapped oil and gas reserves in the country. Rise in population and growing urbanization has led to a surge in energy demand in China. Increasing energy requirement in the country will have a favorable impact on the demand for oil and gas market in China. Growing petrochemical sector and automotive sector is also expected to foster growth of this market. These factors will ensure that the market continues to exhibit steady future growth. However, the market also experiences some pain points. Target to reduce CO2 emission also acts as the greatest hindrance to the development. Increase in foreign dependence for oil and gas supply and growing emphasis on renewable energy utilization to act as a major challenge to the Chinese oil and gas market. Although Chinese players are making overseas investments with a view to reduce foreign dependence for oil and gas. Players are also venturing into construction and expansion of oil and gas terminals with a view to obtain a secure supply of natural gas. The Government of China is actively involved in the development of the domestic oil and gas market. Different pricing and tax reforms were introduced by the government with a view to promote the market. Chinese 12th five year plan has outlined several steps to develop the oil and gas industry in China. Oil and gas market has grown over the past decade at a remarkable rate in China and is expected to grow rapidly owing to increasing energy requirements in the coming future. Table of Contents:
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Oil and Gas Market – China
September 2014
2 OIL AND GAS MARKET IN CHINA 2014.PPT
Executive Summary
Market
Drivers & Challenges
Competition
Domestic oil demand is expected to reach x Mb/d in 20-- growing with a CAGR of x.y% during 20-- - --
Chinese Government is planning to boost the share of natural gas as part of total energy consumption to around x% by the end of 20-- and y% by 20--
Major Players
Company A Company B Company C Company D Company E
Government Initiatives
Chinese 12th Five Year Plan
Tax and Pricing Reforms
Drivers:
Untapped Potential
Rising Population and Urbanization
Growing Automobile Sector
Low Penetration
Growing Petrochemical Industry
Construction and Expansion of LNG Terminal
Construction and Upgrading of Oil Refineries
Overseas Investments
Reliance on Unconventional Gas
Trends
Challenges:
Foreign Dependence
Reduction in CO2 Emission
Increasing Focus on Renewable Energy
3
•Macro Economic Indicators
•Market Overview
• Global
• China
•Exports and Imports
•Drivers & Challenges
•Government Initiatives
•Key Trends
•Competitive Landscape
•Strategic Recommendation
•Appendix
OIL AND GAS MARKET IN CHINA 2014.PPT
4
SAMPLE Economic Indicators (2/3)
Lending Rate: Annual
G F E D C B A 0 %
Per Annum
2013 m
2012 z
2011 y
2010 x
Trade Balance: Annual
Commercial Bank Rates: Key Lending Rates as Prescribed by RBI (All Commercial Banks including SBI) - Minimum Rate General
N.B.: 2012-13 encompasses figure for Apr – Nov 2012
FDI: Net Inflow
2009 2010 2011 2012
E
D
C
B
A
0
d
c b a
USD
bn
2009 2010 2011 2012
CC
BB
AA
0
USD bn
dd cc
bb
aa
OIL AND GAS MARKET IN CHINA 2014.PPT
5
•Macro Economic Indicators
•Market Overview
• Global
• China
•Exports and Imports
•Drivers & Challenges
•Government Initiatives
•Key Trends
•Competitive Landscape
•Strategic Recommendation
•Appendix
OIL AND GAS MARKET IN CHINA 2014.PPT
6
SAMPLE Global oil production grew x% in 2013, registering an increase of aa mn tons from 2010
• Global oil production reached xx mn tonnes in 2013 growing with a CAGR ofa% during 20-- -13
US recorded the largest growth in the world and accounted for around x% of the Non OPEC output in 2013
• Global oil consumption reached aamn tonnes in 2013 growing with a CAGR of x% during 20-- -13
Non OECD countries now account for a% of global oil consumption and they once again accounted for all of the net growth in global consumption
• Global oil reserves increased from aaa thousand mn barrels in 20-- to bbb thousand mn barrels in 20--
Global Oil Market – Overview Global Oil Demand
A5
A4
A3
A2
A1
0
2010
c
2000
b
1990
a
Qu
adri
llio
n B
TUs
x
2040e
e
2025e
d
A3
A2
A1
0
Mn tonnes
2009
g
2008
f
2007
e
2006
d
2005
c
2004
b
2003
a
x
2013
k
2012
j
2011
i
2010
h
Global Oil Production
OIL AND GAS MARKET IN CHINA 2014.PPT
7
SAMPLE In 2013,Middle east region accounted for x% proved oil reserves
Global Gas – Proved Reserves
AA4
AA3
AA2
AA1
0
bcm y
2013
k
2012
j
2011
i
2010
h
2009
g
2008
f
2007
e
2006
d
2005
c
2004
b
2003
a
Global Gas Consumption
A20 A1 A18 A17 A16 A14 A15 A13 A12 A11 A10 A9 A8 A7 A6 A5 A4 A19 A3 A2 A TCM
c4 c5 c6
20-- b1 b2 b3 b4 b5 b6
19-- A a1 a2 a3 a5 a6 a4
B
20-- C c1 c2 c3
aa4 aa3 aa2 aa1 aa6 aa5
Note: TCM: Trillion Cubic Meters
OIL AND GAS MARKET IN CHINA 2014.PPT
8
SAMPLE In 2013, global R/P ratio of oil and gas was x and y respectively
• At the end of 2013, global R/P ratio of oil was x
• In 2013, R/P ratio of oil was the highest for Middle
East at y
• In 2013, R/P ratio of oil was lowest for Asia Pacific at
Z
Global Oil Reserves Global Oil Reserve to Production Ratio
Global Gas Reserve to Production Ratio Global Gas Reserves
• At the end of 2013, global R/P ratio of gas was x
• In 2013, R/P ratio of gas was the highest for Africa at
y
• In 2013, R/P ratio was lowest for North America at z
Note: Reserves-to-production (R/P) ratio: If the reserves remaining at the end of any year are divided by the production in that year, the result is the length of time (yrs.) that those remaining reserves would last if production were to continue at that rate
Proved reserves of natural gas – Generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions
Oil R/P ratio for South and Central America and Gas R?P Ratio for Middle East region is not available
D
C
B
A
0
Asia Pacific
A5
Africa
A4
Middle East
A3
Europe and Eurasia
A2
North America
A1
B
A
0
Asia Pacific
A5
Africa
A4
Europe and
Eurasia
A3
South and Central America
A2
North America
A1
OIL AND GAS MARKET IN CHINA 2014.PPT
9
SAMPLE China’s oil production and consumption has increased over the past decade at a remarkable rate in China…
Domestic Oil Market – Overview
C
B
A
0
Mb/d
X
2018e
x6
2017e
x5
2016e
x4
2015e
x3
2014e
x2
2013
x1
• Domestic oil demand is expected to reach a Mb/d in 20-- growing with a CAGR of x% during 2013-18
• In 2013 the R/P ratio of oil in China was y implying that if oil production continues at the current rate the reserves would last for only y years
• Domestic oil production reached aa mn tonnes in 2013 growing with a CAGR of a% during 2003-13
China’s oil production is expected to increase to about x million bbl/d by the end of 2014
• China’s oil consumption growth has been reduced after a high of m% in 2009
Domestic oil consumption reached a mn tonnes in 2013 growing with a CAGR of x% during 2003-13
• Country’s national oil companies dominate the oil and gas upstream and downstream sectors
However the Chinese government has granted international oil companies more access to technically challenging onshore and deep water of shore fields
Domestic Oil Demand
Oil Production from Overseas Acquisition
x4
x3
x2
x1
0.0
Mn barrels / day
A
2012
Y
2000
X
OIL AND GAS MARKET IN CHINA 2014.PPT
10
SAMPLE Oil demand in China is expected to witness rapid growth in the transportation sector
Sector – Wise Oil Demand
6
4
A
0
A
2035e
z
2020e
y
2010
x
Mboe/d
0.0
0.2
0.4
0.6
0.8 B
2035e
z
2020e
y
2010
x
Mboe/d
0.0
0.5
1.0
1.5
2.0D
2035e
z
2020e
y
2010
x
Mboe/d
0.0
0.2
0.4
0.6
0.8
1.0C
2035e
z
2020e
y
2010
x
Mboe/d
Road Transportation Aviation Sector
Rail and Domestic Navigation Marine Bunkers
OIL AND GAS MARKET IN CHINA 2014.PPT
11
SAMPLE Gas production and consumption has increased rapidly over the past decade in China and …
Domestic Gas Market – Overview
• Domestic gas production reached aa bcm in 2013 growing at a CAGR of x% during 2003-13
Chinese Government is planning to produce about x Tcf of natural gas by the end of 2015
Gas production is expected to increase by x% from aa bcm in 2013 to bb bcm by the end of 2019
Government is also planning to boost the share of natural gas as part of total energy consumption to around x% by the end of 20--and y% by 20--
• In the long term, China’s gas consumption is expected to touch aa bcm in 20-- and bb bcm by 20--
In general, industrial sector consume majority of the gas produced in the country
However, the share of gas consumption in power, residential and transportation sectors have been rising over the past decade
• In 2013 the R/P ratio for gas in China was x implying that if gas production continues at the current rate the gas reserves would last for another x years
• Natural gas demand is expected to reach aa bcm with a CAGR of x% during 2013-18
In the long term, the demand is expected to increase to x Tcf in 20--and y Tcf by 20--
C
B
A
0
x
bcm
2018e
a6
2017e
a5
2016e
a4
2015e
a3
2014e
a2
2013
a1
Domestic Gas Demand
Sector – Wise Gas Demand (2012)
E D
C
B
A
E
D
C
B
A
OIL AND GAS MARKET IN CHINA 2014.PPT
12
SAMPLE Saudi Arabia is a major oil exporter to China accounting for x% of the total oil imports of China
Oil Market – Exports
Oil Market – Imports
E
D
C
B
A
0
USD mn A
2013
A4
2012
A3
2011
A2
2010
A1
D
C
B
A
Malaysia
USA
Japan
Korea
E
D
C
B
A
0
USD mn B
2013
A4
2012
A3
2011
A2
2010
A1
Exports Country Split – 2013
Imports Country Split – 2013
Note: Oil exports and imports under HS code 2709
E
D C
B
A
Others
Russian Federation
Oman
Angola
Saudi Arabia
OIL AND GAS MARKET IN CHINA 2014.PPT
13
SAMPLE Growth in petrochemical industry acts as a major growth driver for the oil and gas market in China
• In China, the total core business revenue of petrochemical enterprises grew x% year on year to ~USD a tn in 2013
• In 2013, Chinese petrochemical industry has recorded y% growth in value added output terms The value added output from Chinese
petrochemical industry accounted for a% of country’s total
• Growth in the petrochemical industry is expected to drive the oil market in China
Growth in Petrochemical Industry Impact Oil Demand in Petrochemical Sector
0 K J I H G F E D C B A
2014e C c1 c2 c3 c4 c5 c5 c7
2013 B b1 b2
‘00
0 b
arrels per d
ay
b3 b4 b5 b6 b7
2012 A a1 a2 a3 a4 a5 a6 a7
GG FF EE DD CC BB AA
Oil Demand by Product
z
y
x
0.0
Mboe/d A
2035e
z1
2020e
y1
2010
x1
OIL AND GAS MARKET IN CHINA 2014.PPT
14
Increase in foreign dependence for oil and gas supply to act as a major challenge to the Chinese oil and gas market
Foreign Dependence Impact
• XX
• XX XX1
Foreign Crude Oil Dependence
D
C
B
A
0
2030e
a4
2015e
a3
2012
a2
2009
a1
% X
D
C
B
A
0
mn
bar
rels
per
day
South Korea
e
India
d
Japan
c
China
b
United States
a
D
C
B
A
0
%
Nov-13
a6
Sep-13
a5
Jul-13
a4
May-13
a3
Mar-13
a2
Jan-13
a1
Rank – Net Oil Importers (2013)
Foreign Natural Gas Dependence
OIL AND GAS MARKET IN CHINA 2014.PPT
15
SAMPLE Chinese 1-th five year plan has outlined several steps to develop the oil and gas industry in China
Initiatives
Target
• XX • XX
• XX
• XX
• XX
• XX
• XX
Construction of Oil and Gas Pipe Networks
• XX
• XX
• XX
• XX
• XX
1-th Five Year Plan – Focus on Oil and Gas Market in China
Stabilizing Oil Production and Increasing Gas Production
OIL AND GAS MARKET IN CHINA 2014.PPT
16
SAMPLE Mergers & Acquisitions in Chinese Oil and Gas Market
Overseas Investments (2/6)
Announced Date
Closed Date Transaction Type Target Buyer/Investors Sellers Deal Size (USD mn)
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
OIL AND GAS MARKET IN CHINA 2014.PPT
17
Chinese oil and gas players are venturing into construction and expansion of…
• XX
• XX
• XX
• XX
• XX
Construction and Expansion of LNG Terminal (1/3)
Players invest in LNG terminals to
secure unhindered supply of natural
gas
LNG Terminals – Current and Proposed Development Plans (1/3)
Terminal Name Status/Online Date Developer Initial / Expansion Capacity (Mncf/d)
Possible Supplier
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
Note: mncf/d= mn cubic ft per day
OIL AND GAS MARKET IN CHINA 2014.PPT
18
SAMPLE Market Competition – Porter’s Five Forces Analysis
• XX
• XX
• XX
• XX
• XX
Bargaining Power of Suppliers
Threat of New Entrants
Competitive Rivalry Bargaining Power of Buyers
Threat of Substitutes
Impact X
Impact X
Impact X Impact
X
Impact X
OIL AND GAS MARKET IN CHINA 2014.PPT
19
SAMPLE Competitive Benchmarking (1/x)
Public Trading Comparables (FY 2013)
Company A Company B Company C
Market Capitalization (USD mn) - - -
Share Price (USD) - - -
EV/EBITDA (x) - - -
EV/Revenue (x) - - -
PE Ratio - - -
Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization is as on 25/06/20--, Share Price is as on 25/06/20-- and PE ratio is as on 24/06/20--
OIL AND GAS MARKET IN CHINA 2014.PPT
20
SAMPLE Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (2/3)
Competitive Benchmarking (3/5)
Y
X
0
%
Company C
y3 x3
Company B
y2 x2
Company A
y1 x1
Return on Capital Employed Return on Equity
Z
Y
X
0.0
Company C
x3
Company B
x2
Company A
x1
Current Ratio
• XX
• XX
• XX
• XX
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
21
SAMPLE
Key People
Products and Services
Company Information Locations – China
Corporate Address
XX
Tel No. XX
Fax No. XX
Website XX
Year of Incorporation XX
Ticker Symbol XX
Stock Exchange XX
Category Products/Services
Oil and Gas XX
Oil Refining XX
Petrochemicals XX
Services XX
Name Designation
Chunguang Li XX
Xinhua Wang XX
Xiyou Cai XX
Houliang Dai XX
Headquarters
Public: Domestic Company – Company A (1/4)
OIL AND GAS MARKET IN CHINA 2014.PPT
22
SAMPLE
Financial Snapshot Key Ratios
Financial Summary
• XXX
Financial Summary
Profit / Loss Total Income
10,92410,24811,61510,887
0
5,000
10,000
15,000XX
XX
XX
0
2011
398,831.9
2010
291,179.1 447,424.0
Total Income USD mn
Profit USD mn
2013
477,133.8
2012
Indicators Value (26/06/20--) Market Capitalization (USD) XX
Total Enterprise Value (USD) XX
EPS (USD) XX
PE Ratio (Absolute) XX
Particulars y-o-y
change (2013-2012)
2013 2012 2011 2010
Profitability Ratios
Operating Margin -0.15 3.38% 3.53% 4.19% 6.11%
Net Margin 0.00 2.29% 2.29% 2.91% 3.74%
Profit Before Tax Margin 0.04 3.29% 3.25% 4.16% 5.40%
Return on Equity -1.02 10.64% 11.66% 14.43% 15.91%
Return on Capital Employed -1.18 12.05% 13.23% 15.06% 17.79%
Return on Working Capital 17.25 -49.17% -66.42% -103.89% -154%
Return on Assets -0.76 7.07% 7.83% 9.21% 11.78%
Return on Fixed Assets -1.23 11.77% 13.00% 15.57% 18.61%
Cost Ratios
Operating costs (% of Sales) 0.14 96.61% 96.46% 95.79% 93.87%
Administration costs (% of Sales) 0.30 4.35% 4.05% 4.17% 4.43%
Interest costs (% of Sales) -0.03 0.37% 0.40% 0.37% 0.42%
Liquidity Ratios
Current Ratio -8.26% 0.65 0.71 0.77 0.77
Cash Ratio 34.03% 0.16 0.12 0.16 0.19
Leverage Ratios
Debt to Equity Ratio -11.38% 0.42 0.48 0.38 0.45
Debt to Capital Ratio -7.99% 0.30 0.32 0.27 0.31
Interest Coverage Ratio 4.96% 9.22 8.78 11.41 14.72
Efficiency Ratios
Fixed Asset Turnover -5.62% 3.47 3.68 3.70 3.03
Asset Turnover -5.96% 2.08 2.21 2.19 1.92
Current Asset Turnover 1.16% 7.72 7.63 7.31 7.35
Working Capital Turnover -22.86% -14.48 -18.78 -24.69 -25.11
Capital Employed Turnover -5.37% 3.25 3.44 3.59 2.92
Improved Decline
Public: Domestic Company – Company A (2/4)
OIL AND GAS MARKET IN CHINA 2014.PPT
23
SAMPLE Key Business Segments Key Geographic Segments
Key Recent Developments
Description News
Overview • XX
Reserves • XX
Business highlights
• XX
27.8%
31.3% 30.9% 31.2% 31.0%
29.2% 27.8% 26.9% 27.0%
28.0%26.0%24.0%9.9%
5.0%5.4%5.6%
0%
50%
100%
2013
9.0%
2012
8.7%
2011
9.7%
2010
5.6%
D B E C A
78% 75% 73%
25% 27%22%
100%
0%
50%
100%
2012 2013 2011 2010
0%
B A
Public: Domestic Company – Company A (3/4)
OIL AND GAS MARKET IN CHINA 2014.PPT
24
SAMPLE
• XX • XX
• XX • XX
T O
W S
Public: Domestic Company – Player A (4/4)
OIL AND GAS MARKET IN CHINA 2014.PPT
Strength Weakness
Opportunity Threat
25
SAMPLE Strategic Recommendations
Focus on AA Sector
• XX
AAAAAA
Focus on BB Sector
• XX
CC
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
26
Thank you for the attention
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Oil and Gas Market – China report is a part of Netscribes’ Energy Industry Series. For any queries or customized research requirements, contact us at:
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OIL AND GAS MARKET IN CHINA 2014.PPT