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Oil and Gas Market – China September 2014
Executive Summary Market
Drivers & Challenges
Government Initiatives Trends
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--
Drivers:
Challenges:
Untapped Potential Rising Population and Urbanization Growing Automobile Sector Low Penetration Growing Petrochemical Industry
Foreign Dependence Reduction in CO2 Emission Increasing Focus on Renewable Energy
Chinese 12th Five Year Plan Tax and Pricing Reforms Construction and Expansion of LNG Terminal Construction and Upgrading of Oil Refineries Overseas Investments Reliance on Unconventional Gas Major Players
Competition
Company A
Company B
Company C
OIL AND GAS MARKET IN CHINA 2014.PPT
Company D
Company E
2
•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
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SAMPLE
Economic Indicators (2/3) Lending Rate: Annual
2010
A
B
C
D
E
F
G
% Per Annum
E D USD bn
0
Trade Balance: Annual
x
d
a
b
c
C B A
2011
0
y
2010 2011 N.B.: 2009 2012-13 encompasses figure for Apr – Nov 2012
2012
FDI: Net Inflow 2012
z USD bn CC
2013
bb
m BB
cc
dd
aa
AA Commercial Bank Rates: Key Lending Rates as Prescribed by RBI (All Commercial Banks including SBI) - Minimum Rate General
0
2009
OIL AND GAS MARKET IN CHINA 2014.PPT
2010
2011
2012
4
•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
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Global oil production grew x% in 2013, registering an increase of aa mn tons from 2010
SAMPLE
Global Oil Market – Overview
Global Oil Demand
• Global oil production reached xx mn tonnes in 2013 growing with a CAGR ofa% during 20-- -13 Quadrillion BTUs
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
x
A5
A4
e
2025e
2040e
c
b
a
A3 A2
d
A1 0 1990
• Global oil reserves increased from aaa thousand mn barrels in 20-- to bbb thousand mn barrels in 20--
2000
2010
Global Oil Production Mn tonnes A3 A2
x a
b
c
d
e
f
g
h
i
j
k
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
A1 0
OIL AND GAS MARKET IN CHINA 2014.PPT
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In 2013,Middle east region accounted for x% proved oil reserves
SAMPLE
Global Gas Consumption bcm y
AA4 a
b
c
2003
2004
2005
AA3
d
e
f
g
h
i
j
k
2006
2007
2008
2009
2010
2011
2012
2013
AA2 AA1 0
Global Gas – Proved Reserves A2
A3
A4
a2
A5
A6
19--
a1
a3
20--
b1
b2
b3
b4
20--
c1
c2
c3
c4
A7
A8
A9
A10 A11 A12 A13 A14 A15 A16 A17 A18 A19 A20
a4
a5
a6
b5
b6
c5 aa1
aa2
c6 aa3
aa4
aa5
A A
TCM
A1
B C
aa6
Note: TCM: Trillion Cubic Meters
OIL AND GAS MARKET IN CHINA 2014.PPT
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In 2013, global R/P ratio of oil and gas was x and y respectively
SAMPLE
Global Oil Reserves
Global Oil Reserve to Production Ratio
• At the end of 2013, global R/P ratio of oil was x
D
• In 2013, R/P ratio of oil was the highest for Middle East at y
C
• In 2013, R/P ratio of oil was lowest for Asia Pacific at Z
B
A3 A4
A1 A2
A5
A 0 North America
Europe and Middle East Eurasia
Africa
Asia Pacific
Global Gas Reserves
Global Gas Reserve to Production Ratio
• At the end of 2013, global R/P ratio of gas was x
B
• 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
A
A2
A3
South and Central America
Europe and Eurasia
A4 A5
A1
0 North America
Africa
Asia Pacific
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 OIL AND GAS MARKET IN CHINA 2014.PPT
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China’s oil production and consumption has increased over the past decade at a remarkable rate in China…
SAMPLE
Domestic Oil Market – Overview Domestic Oil Demand • 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
Mb/d X
C B
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
x2
x3
x4
x5
x6
2013
2014e
2015e
2016e
2017e
2018e
A 0
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
x1
Oil Production from Overseas Acquisition Mn barrels / day Y
x4
A
x3
x2 x1
X
0.0
OIL AND GAS MARKET IN CHINA 2014.PPT
2000
2012
9
Oil demand in China is expected to witness rapid growth in the transportation sector
SAMPLE
Road Transportation
Aviation Sector Mboe/d
Mboe/d
A
6
z
y
4
0.8
B
0.6
y
0.4
x A
0.2
0
0.0 2010
2020e
2035e
Rail and Domestic Navigation
2020e
2035e
Marine Bunkers Mboe/d
Mboe/d
1.0 0.8 0.6 0.4 0.2 0.0
x
2010
Sector – Wise Oil Demand
z
C
z
y
z
2.0 D
1.5
x
1.0 0.5
y x
0.0 2010
2020e
2010
2035e
OIL AND GAS MARKET IN CHINA 2014.PPT
2020e
2035e
10
Gas production and consumption has increased rapidly over the past decade in China and …
SAMPLE
Domestic Gas Market – Overview
Domestic Gas Demand
• 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--
bcm x
C B
2013
2014e
2015e
2016e
A 0
• 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
a3
a4
a1
a2
a6
a5
2017e
2018e
Sector – Wise Gas Demand (2012) D
E
A
C
A
D
B
E
C
B
In the long term, the demand is expected to increase to x Tcf in 20--and y Tcf by 20-OIL AND GAS MARKET IN CHINA 2014.PPT
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Saudi Arabia is a major oil exporter to China accounting for x% of the total oil imports of China
SAMPLE
Oil Market – Exports USD mn
Exports Country Split – 2013
E D
D
A A1
A3
A2
C A
A4
C
Japan
B
USA
A
Malaysia
B
0 2010
2011
2012
2013
Imports Country Split – 2013
Oil Market – Imports USD mn E D C B A 0
Korea
A
B A2
A3
A4
Saudi Arabia E
A1
B
Angola Oman Russian Federation
C D 2010
2011
2012
Others
2013 Note: Oil exports and imports under HS code 2709 OIL AND GAS MARKET IN CHINA 2014.PPT
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Growth in petrochemical industry acts as a major growth driver for the oil and gas market in China
SAMPLE
Growth in Petrochemical Industry
Oil Demand in Petrochemical Sector
• 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
Mboe/d
A
z y
The value added output from Chinese petrochemical industry accounted for a% of country’s total
Impact
z1
y1 x1
x 0.0
• Growth in the petrochemical industry is expected to drive the oil market in China
2010
2020e
2035e
0
A
2012
a1
2013
b1
2014e
c1
B
C
D
a2
E
F
a3
a4
b2
b3
b4
c2
c3 AA
BB
G a5
DD
EE
c5 FF
OIL AND GAS MARKET IN CHINA 2014.PPT
I a6
b5
c4 CC
H
J a7
b6
A b7
c5
K
B c7
‘000 barrels per day
Oil Demand by Product
C
GG
13
Increase in foreign dependence for oil and gas supply to act as a major challenge to the Chinese oil and gas market Foreign Dependence
Rank – Net Oil Importers (2013) D
mn barrels per day
• XX • XX XX1
a
Impact
b
C
c
B
d
e
India
South Korea
A 0 United China States
Foreign Natural Gas Dependence
Foreign Crude Oil Dependence % D a2
C
B
a4
X a3
% D C
a1
a1
a2
a3
a4
a5
a6
B
A
A
0
0
2009
Japan
2012
2015e
2030e
Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13
OIL AND GAS MARKET IN CHINA 2014.PPT
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Chinese 1-th five year plan has outlined several steps to develop the oil and gas industry in China
SAMPLE
1-th Five Year Plan – Focus on Oil and Gas Market in China
Target • XX • XX Stabilizing Oil Production and Increasing Gas Production
Initiatives
• XX • XX • XX • XX • XX Construction of Oil and Gas Pipe Networks
• XX • XX • XX • XX • XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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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
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Chinese oil and gas players are venturing into construction and expansion of… Construction and Expansion of LNG Terminal (1/3) • XX
Players invest in LNG terminals to secure unhindered supply of natural gas
• XX • XX • XX • XX 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
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SAMPLE
Market Competition – Porter’s Five Forces Analysis Impact X
Threat of New Entrants
• XX
Impact X
Bargaining Power of Suppliers
• XX
Competitive Rivalry
Impact X
• XX
Impact X
Bargaining Power of Buyers
• XX
Threat of Substitutes
Impact X
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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Competitive Benchmarking (1/x) Public Trading Comparables (FY 2013)
SAMPLE
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
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Competitive Benchmarking (3/5)
SAMPLE
Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (2/3)
Return on Equity
Return on Capital Employed
Current Ratio
% Y
x1
y1
X
x2
y2
x3
y3
Z
x1
Y
x2
x3
Company B
Company C
X 0
0.0 Company A
Company B
Company C
Company A
• XX • XX • XX
• XX • XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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Public: Domestic Company – Company A (1/4)
SAMPLE
Company Information
Locations – China
XX Corporate Address Tel No.
XX
Fax No.
XX
Website
XX
Year of Incorporation
XX
Ticker Symbol
XX
Stock Exchange
XX
Products and Services Category
Products/Services
Oil and Gas
XX
Oil Refining
XX
Petrochemicals
Services
XX
XX
Headquarters
Key People Name
Designation
Chunguang Li
XX
Xinhua Wang
XX
Xiyou Cai
XX
Houliang Dai
XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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Public: Domestic Company – Company A (2/4) Financial Snapshot Total Income USD mn XX
Total Income 11,615
10,887
Key Ratios Profit / Loss 10,924
10,248
XX
15,000 10,000
XX
291,179.1
398,831.9
447,424.0
477,133.8
2011
2012
2013
0
5,000 0
2010
y-o-y change (2013-2012)
2013
2012
2011
2010
Operating Margin
-0.15
3.38%
3.53%
4.19%
6.11%
Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
0.00
2.29%
2.29%
2.91%
3.74%
0.04 -1.02 -1.18
3.29% 10.64% 12.05%
3.25% 11.66% 13.23%
4.16% 14.43% 15.06%
5.40% 15.91% 17.79%
17.25
-49.17%
-66.42% -103.89%
Profit USD mn
Financial Summary
Particulars Profitability Ratios
-154%
-0.76
7.07%
7.83%
9.21%
11.78%
-1.23
11.77%
13.00%
15.57%
18.61%
0.14
96.61%
96.46%
95.79%
93.87%
0.30
4.35%
4.05%
4.17%
4.43%
-0.03
0.37%
0.40%
0.37%
0.42%
Current Ratio
-8.26%
0.65
0.71
0.77
0.77
Cash Ratio
34.03%
0.16
0.12
0.16
0.19
-11.38%
0.42
0.48
0.38
0.45
-7.99%
0.30
0.32
0.27
0.31
4.96%
9.22
8.78
11.41
14.72
-5.62%
3.47
3.68
3.70
3.03
-5.96%
2.08
2.21
2.19
1.92
1.16%
7.72
7.63
7.31
7.35
-22.86% -5.37%
-14.48 3.25
-18.78 3.44
-24.69 3.59
-25.11 2.92
Cost Ratios
• XXX
Operating costs (% of Sales)
SAMPLE
Administration costs (% of Sales) Interest costs (% of Sales) Liquidity Ratios
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Financial Summary Indicators Market Capitalization (USD) Total Enterprise Value (USD) EPS (USD) PE Ratio (Absolute)
Value (26/06/20--) XX XX XX XX
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved
OIL AND GAS MARKET IN CHINA 2014.PPT
Decline
22
SAMPLE
Public: Domestic Company – Company A (3/4) Key Business Segments A
C
100%
B
5.6% 29.2%
50% 0%
E
24.0%
2010
D
27.8%
31.3% 9.9%
Key Geographic Segments A
5.6%
26.9%
5.4%
27.0% 5.0%
30.9% 9.7% 26.0%
31.2% 8.7% 27.8%
31.0% 9.0% 28.0%
2011
2012
2013
B
100% 50%
100%
0%
0% 2010
78%
75%
73%
22%
25%
27%
2011
2012
2013
Key Recent Developments Description
News
Overview
• XX
Reserves
• XX
Business highlights
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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SAMPLE
Public: Domestic Company – Player A (4/4)
• XX
• XX
S
W
Strength
Weakness
O
T
Opportunity
Threat
• XX
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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SAMPLE
Strategic Recommendations AAAAAA
Focus on BB Sector
Focus on AA Sector
• XX
• XX
CC
• XX
OIL AND GAS MARKET IN CHINA 2014.PPT
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