Expert Insight

Four Things We Learned in China this Month

October  2017
By Oil and Gas Council

China has become, unknown to many, a leading light in both the promotion and adoption of renewable energy sources. While other countries stumble (often clumsily) with energy investment, policy and/or leadership, China has made aspirational strides forward, leaving many countries embarrassingly behind. This momentum will not slow down. China is pressing on, fast, the question is how long will most other countries wait till they react with the same levels of drive and commitment.

There is a tantalising mystery and allure surrounding the depth and variety of Chinese capital. Billions of renminbi (and US dollars) are out there, looking for investment ideas. Frustratingly, however, the attractiveness of the oil and gas sector (from low prices, sliding revenues and depressed share performance) has made it difficult to secure Chinese investment, especially for foreign companies. The mystery in the short term we are afraid will only grow, many will have their patience tested.

We are always in awe of the scale of the US private energy sector. There are dozens of companies with billion-dollar market caps, huge operations and equally robust balance sheets. Who can compete? Well, previously no-one. Until now. The Chinese private energy sector is booming. Billion-dollar market cap companies now populate their landscape because of their investments in energy infrastructure, LNG trading, natural gas distribution and refining. Another Goliath industry was awoken and grows.

Chinese gas demand is forecasted to rise exponentially in the coming years; it is now the world’s second-biggest importer of natural gas. Gas developers and project sponsors know this only too well. Any future gas/LNG project’s viability and success will be determined by how successful it is in winning gas sales agreements with this emerging wave of Chinese energy buyers. You have to be connected into China. Are you?

 

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