Market Research Report : Oil and gas market in china 2014 - Sample

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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


5

•Macro Economic Indicators

•Market Overview

• Global

• China

•Exports and Imports

•Drivers & Challenges

•Government Initiatives

•Key Trends

•Competitive Landscape

•Strategic Recommendation

•Appendix


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


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


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


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


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


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


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


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


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


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


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)

- - - - - - -

- - - - - - -

- - - - - - -

- - - - - - -

- - - - - - -


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


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


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--


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


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)


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



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



24

SAMPLE

• XX • XX

• XX • XX

T O

W S

Public: Domestic Company – Player A (4/4)


Strength Weakness

Opportunity Threat

25

SAMPLE Strategic Recommendations

Focus on AA Sector

• XX

AAAAAA

Focus on BB Sector

• XX

CC

• XX


26

Thank you for the attention

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