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Transcript of Shulin Presentation
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China National Petroleum Corporation
The Development of Chinas
Natural Gas Market
Mr. Su Shulin
June, 2005
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2
Contents
I. The status quo of the development ofChinas natural gas industry.
II. The major utilization fields of Chinas natural gas.
III. The suggestions for the development ofChinas natural gas industry.
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3
The Status quo of the Development of
Chinas Natural Gas Industry
1General Introduction
2Status quo of Resources Exploitation
3Status quo of Pipeline Network Construction
4Status quo of Natural Gas Consumption
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4
1General Introduction
Exploitation and utilization of natural gas is of great significance for
ameliorating Chinas energy structure and protecting the environment.
In recent years, Chinas natural gas supply, consumption and pipeline
network construction have entered a booming period.
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1General Introduction
Resourcesformation of four major onshore gasfields and two offshore gas fields.
Pipelinespreliminary formation of the nationalbackbone pipeline network with the West-East
Pipeline as the trunk line.
Marketrapid increase of natural gas demand,and emergence of a huge market.
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2Status quo of Resources Exploitation
Chinas natural gas
reserves are mainlyin the onshore Tarim
Basin, Ordos Basin,
Sichuan Basin and
Zaidam Basin, and
offshore Yingqiong
Basin and East Sea
Basin.
Tarim Basin
Ordos BasinZaidam Basin
Sichuan
Basin
Yingqiong
Basin
East Sea
Basin
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2.Chinas Abundant Natural Gas Resources
Projects National Total
Resourcestrillion cubic meters 47Proven reserves100 million cubic meters 49000Remaining recoverable reserves100 million cubic meters 22289
as of the end of 2004
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2Steady Increase of Chinas Natural Gas Production
Unit100 million cubic meters/ year
0
100
200
300
400
500
Output 152 174 262 303 326 341 408
1990 1995 2000 2001 2002 2003 2004
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Comparison between Chinas Natural Gas Production and some
Other Countries100 million cubic meters
Chinas natural gas production ranks 17
th
in the world
0
1000
2000
3000
4000
5000
6000
7000
Britain Norway Italy Germany Russia Saudi
Arabia
United Arab
Emirates
QatarCanada ChinaU.S.
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3Status quo of Pipeline Network Construction
131
1-1
4
Long-distance
pipeline
West-East
Pipeline
12bcm/year
Shaanxi-Beijing
Pipeline
3bcm/year
Sebei-Ningxia-
Lanzhou2bcm/year
Zhongxian-
Wuhan Pipeline
3bcm/year
Second
Shaanxi-Beijing
Pipeline
12bcm/year
Southwest
Pipeline
Network
100bcm/year
Yagang
Pipeline
3bcm/yearransmission capacity of 45 bcm/yearcome into shape
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Among the six national backbone pipelines already built, the West-East Gas Pipeline
has the greatest significance for the development of Chinas natural gas industry.
The West-East Gas Pipeline is the milestone project symbolizing Chinas naturalgas industry entering a new era of rapid development from start-up.
West-Gas PipelinePipe diameter1016mmLength3900 kmDesign Pressure10 MPaTransmission Capacity120108m3/a
Lunnan
Shanghai
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4Status quo of Natural Gas Consumption
Increase of Chinas Natural Gas Consumption from 2000 to 2004(100 million cubic meters)
250 264284 301
360
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004
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Urumchi
Lhasa
Xining
Lanzhou
Shijiazhuang
Beijing
Jinan
Harbin
Changchun
Shenyang
ZhengzhouXian Nanjing
ShanghaiHefei
Wuhan
Nanchang
Hangzhou
FuzhouChangsha
NanningGuangzhou
Daqing
Dalian
Chinas Natural Gas are mainly consumed in peripheral areas
of gas fields and East China
Major Long-distance
pipelines
Peripheral areas
of gas fields
East
China
Market
Ch i l i d t th j f Chi
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Chemical industry as the major consumer of Chinas
natural gas
Chemical
Industry
35%
Power Plant
13%
Civil fuels
24%
Industrial
fuels 28%
Chinas Natural Gas Consumption Structure2003
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Pricing Mechanism
Factory price+ tariff= City gate price
City gate price +distribution price= End user price
Chinas Natural Gas Pricing Mechanism
Factory Price Tariff
Direct supply price
City Gate Distribution End User
Government
stipulates the priceLocal governmentsstipulate the price
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Contents
I. The status quo of the development ofChinas natural gas industry.
II. The major utilization fields of Chinas natural gas.
III. The suggestions for the development ofChinas natural gas industry.
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II. The major utilization fields of Chinas natural gas
1Various factors contributing to the rapid
development of Chinas natural gas market.
2Development trends of Chinas natural gas market.
3Civil fuels plays the leading role in natural gas
utilization.
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1Government policies support the utilization ofnatural gas
1Various factors contributing to the rapiddevelopment of Chinas natural gas market.
Scientific development concept of People-first, all-
around coordinated sustainable development.
Sustainable energy development strategy of
prioritizing energy saving, diversified structure,
benign environment and market-oriented.
Governments at various levels support the
development of natural gas industry.
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Economic driveChinas GDP has been increasing rapidlyChinas GDP in2004 was 13.65 trillion RMB yuan (around 1.6 trillion U.S. dollars)representing a 9.5% increase over the previous year.
2Rapid economic growth drives the fastdevelopment of natural gas market
0
20000
40000
60000
80000
100000
120000
140000
160000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Chinas GDP Growth1995-2004
Unit: trillion yuan
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Environment protection drivehigher requirement on environmentprotection leads to more emphasis upon the utilization of clean energy
like natural gas.
3Environment Protection Drives the fast developmenof Chinas Natural Gas Market
Government and people from all walks of life attaches greatimportance to environment protection.
Vigorously popularizing the utilization of such clean energies asnatural gas has become one of the effective measures of protectingthe environment and improving air quality.
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Chinas total number of cities is about 660, with 109 million
households and a urban population of 352 million.
In 2020, Chinas urbanization level is to reach 55% from the
current 35%.
Urbanization and improvement of peoples living standardare to promote natural gas utilization in civil gas field.
Infrastructure construction lays a foundation for Chinasmass utilization of natural gas.
4 Urbanization Drives the fast developmentof Chinas Natural Gas Market
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1Forecast of naturalgas demand Chinasnatural gas market isto develop rapidly dueto the requirement ofmacro policies,scientific developmentconcept, and driven byeconomic development,environment protection,and urbanization. Itis estimated thatChinas demand fornatural gas is to
reach 200 bcm in 2020,with an annual growthrate of 11.8%.
2Development trends of Chinas natural gas market.
1 0 0 0
2 0 0 0
36 0
0
500
1000
1500
2000
2500
Up 11.8% annually
Forecast of Chinas Natural Gas Demand Increase
(100 million cubic meters)
2004 2010 2020
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Taipei
Beijing
It is estimated that the
natural gas consumption
in northeast, Bohai Bay
area, Yangtse River
Delta and Southeast
coastal areas is to
account for over 60% of
the countrys total
consumption.
2Natural Gas Demand Allocation
Northeast
Yangtse River
Delta
Bohai Bay
Area
Southeast
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Natural gas consumption structure is to be optimized, civil use and
power generation constitute major utilization of natural gas.
Forecast of Chinas Natural Gas Consumption Structure in 2020
15%
22%
27%
36%
0% 10% 20% 30% 40%
3Natural Gas Consumption Structure
Civil use
Power
Generation
Industrial
Fuels
Natural gas
Chemical
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Currently, natural
gass proportion inprimary energy is less
than3which is
expected to increase
steadily, and reach 8-
10 in 2020.
2.6%
2004
2020
6.0%
2010
8.0%
4Natural Gas Proportion in Primary Energ
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Beijing
4
1Distribution of Chinas Civil Gas Market
Major civil
gas market
3Civil fuels plays the leading role in natural gas utilization.
Natural gas
gradually
becomemajor fuel of
Chinas civil
gas market.
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2Natural gas becomes major source of Chinas civil gassupply
It is estimated that in 2020, natural gass popularization rate is to reach 60-70%and
becomes major source of Chinas civil gas supply.
65%
35%
Forecast of natural gas proportion in civil gas in 2020
Natural gas
Other fuels
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3Development Trend of Civil Utilizationof Natural Gas
The scale of civil gas supply system is getting larger
Civil gas supply is to expand the utilization into other
industrial fields such as natural gas cars, heating and freezing
together with the enhancement of popularization rate of
natural gas.
Distributed natural gas freezing, heating, power combined
supply system has broad room for development.
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4Civil Gas Use Typical CaseBeijing
Beijing used to be one of Chinas seriously polluted cities.
Statistics shows that the annual amount of sulfur dioxide,
nitrogen oxides and atmosphere suspended particulates are
0.080
0.140 and 0.364 mg respectively.
In order to improve Beijings air quality, the municipal
government decided to utilize natural gas to replace fuelslike coals.
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Rapid growth of Beijings natural gas consumption
(Unit:100 million cubic meters)
In 1997, Beijings natural gas consumption was merely 0.18 bcm.
In 2004, Beijings natural gas consumption reached 2.53 bcm.
1.83.8
7.611
14.518.2
2225.3
0
5
10
15
20
25
30
1997 1998 1999 2000 2001 2002 2003 2004
Marked Improvement of Beijings
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Marked Improvement of Beijings
Atmosphere Quality
In 229 days of 2004, the citys urban air quality was and above Grade II.
Days when Air quality was and
above Grade II
Pollutant emission
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Contents
I. The status quo of the development ofChinas natural gas industry.
II. The major utilization fields of Chinas natural gas.
III. The suggestions for the development ofChinas natural gas industry.
III The market development strategies of Chinas
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III. The market development strategies of Chinas
natural gas industry
1Intensifying Resources Exploration andExploitation
2Accelerating the Construction of NaturalGas Pipeline Network
3Strengthening International Cooperation
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1Intensifying Resources Exploration and Exploitation
Chinas natural gas exploration and development has a
bright future.
To ensure the rapid growth of domestic natural gas production through
intensified exploration.
Strengthening the exploration and development of coal-bed methane
and promote the utilization of it.
Chinas Natural Gas Industry Development
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Steady Increase of Chinas Domestic Natural
Gas Proven Reserves (trillion cubic meters)
10
4.9
6.5
0
2
4
6
8
10
12
2004 2010 2020
Chinas Natural Gas Industry Development
Owns Good Resources Support
407
850
1200
0
200
400
600
800
1000
1200
1400
2004 2010 2020
Steady Increase of Chinas Domestic Natural
Gas Production (100 million cubic meters)
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2Accelerating the Construction of Natural Gas Pipeline Network
Construction of nationwide backbone pipeline network.
Establishment of liaison and distribution system with liaisonline as the bridge.
Building storage facilities with underground gas storage as
the core.
Diversified gas supply via onshore pipeline and offshore
LNG.
Stipulating emergency and peak shaving schemes.
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Personnel training: collaborate in technology, management and
commerce training
Technology transfer: actively import and absorb advanced technologies
from developed countries
Strengthening cooperationactively participating in domestic andinternational cooperation of natural gas projects. Importing oversea
natural gas, Chinas guideline in natural gas utilization is Domestic
production playing dominant role and importation as supplement.
3Strengthening International Cooperation
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Thank you