China Gas Market Outlook And Opportunities for Japaneneken.ieej.or.jp/data/7235.pdfsia-energy.com Content China Gas Demand China Gas Supply China Gas Reform Outlook Emerging Tier-2

Prepared for IEEJ 28 February 2017

China Gas Market Outlook And

Opportunities for Japan

IEEJ：March 2017 © IEEJ2017

sia-energy.com

China Gas Supply/Demand Overview

Source: SIA Energy


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Content

China Gas Demand

China Gas Supply

China Gas Reform Outlook

Emerging Tier-2 LNG Players in China

Opportunities for Japanese Companies


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China Gas Demand Is Estimated to Exceed 208 bcm in 2016, an 8% Year-on-year Growth

13%

21%

45%

7%

10%

5%

0%

3%

6%

9%

12%

15%

18%

21%

24%

27%

0

25

50

75

100

125

150

175

200

225

2011

2012

2013

2014

2015

2016E

bcm

China Gas Demand by Sector 2011-2016E

Loss

Commercial, public service and other

Transporation

Industrial

Gas power and centralized heating

Residential

% yoy change (r-axis)

Source: SIA Energy

0

2

4

6

8

10

12

14

16

18

20

Pow

er

and c

entr

alized h

eating

Industr

ial

Resid

ential

Tra

nsport

ation

Com

merc

ial, p

ublic s

erv

ice a

nd

oth

er

bcm

Source: SIA Energy

China Gas Demand Change by Sector (2016 vs. 2015)

2016 gas demand incremental is estimated to be 15 bcm, mainly pushed by power and centralized heating sector and recovery of industrial demand thanks to price down since end 2015


sia-energy.com

-

5

10

15

20

25

J F M A M J J A S O N D

bcm

2010 2011 2012 2013

2014 2015 2016

Source: SIA Energy created from the NDRC and China Custom data

Demand Hit Historical High in Dec 2016, Showing Stronger Seasonal Characteristics

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

Dec-1

3

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

bcm

Mainland China Apparent Consumption % Change YOY

Source: SIA Energy created from the NDRC and China Custom data

China Monthly Apparent Gas Consumption China Apparent Gas Consumption Seasonality

Peak-valley monthly difference in 2016 reached 6.6 bcm, 1.1bcm higher than that in 2015.


Service / Presentation Name ◦ Page 6sia-energy.com

Similar Story Will Continue in 2017, and Growth Is Expected to Return to Double-Digit Rate

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

Resid

ential

Gas p

ow

er

and

centr

alized h

eating

Industr

ial

Tra

nspora

tion

Com

merc

ial, p

ublic

serv

ice a

nd o

ther

bcm

China Gas Demand by Sector 2016E

Source: SIA Energy

Residential

13%

Gas power

and centralized

heating23%

Industrial

43%

Transporation

7%

Commercial, public service

and other

9%

Loss

5%

2017 Gas Demand Forecast by Sector

Source: SIA Energy

Total Demand

232 bcm

Drivers:a) continuing contracted LNG imports pushb) large gas power capacity will come online, especially in Guangdong and Jiangsuc) industrial gas demand and users are cultivated with infrastructure development



Primary Energy Target of China’s 13th Five-Year Plan

Coal

58%

Oil

17%

Gas

10%

Non-fossil fuel

15%

Source: NDRC, SIA Energy

Total Energy Consumption5 billion tsce

Primary Energy Target in 2020

Coal

64%

Oil

18%

Gas

6%

Non-fossil fuel

12%


Total Energy Consumption4.3 billion tsce

Primary Energy Mix in 2015



Gas is the Biggest Beneficiary of 13th FYP’s Incremental Energy Consumption

1.5

0.7

2.52.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Coal Oil Gas Non Fossil Fuels

tsce


Incremental Energy Consumption in 13th Five-Year Plan by Fuel

Non-fuel energy



China Gas Demand Outlook 2030

0

50

100

150

200

250

300

350

400

450

500

550

2015

2016E

2017F

2018F

2019F

2020F

2021F

2022F

2023F

2024F

2025F

2026F

2027F

2028F

2029F

2030F

bcm

China Gas Demand Outlook 2030

Residential Gas power and centralized heating

Industrial Transporation

Commercial, public service and other Loss

Source: SIA Energy

Gov’t Target


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Content

China Gas Demand

China Gas Supply





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0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

9.0%

10.5%

12.0%

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 2015E 2016E

bcm

Production % yoy change (r-axis)

Domestic Gas Production 2011-2016

Domestic Conventional Gas Production Saw a Moderate Increase in 2016 Amid Low Oil Prices

Source: SIA Energy

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Sic

huan

Oth

er

Xin

jiang

Shaanxi

Guangdong

(off

shore

)

bcm

Source: SIA Energy

2016 Gas Production Change by Province


sia-energy.com

China 2017 Gas Supply Growth Will be Led by TOP Imported LNG and Pipeline Gas, and Domestic Shale Gas

200

205

210

215

220

225

230

235

240

2016 G

as S

upply

Conventional O

nshore

Conventional O

ffshore

Tig

ht

Gas

Shale

Gas

CBM

& C

MM

SN

G

Import

ed P

ipeline G

as

Export

ed P

ipeline G

as

Import

ed L

NG

2017 A

ppare

nt

Dem

and

Sto

ck C

hange

2017 R

eal G

as

Dem

and

bcm

/a

Source: SIA Energy

China 2017 Gas Supply Change by Source


sia-energy.com

Gas Imports by Source (1/3)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

bcm

Turkmenistan Uzbekistan Myanmar KazakhstanQatar Australia Indonesia MalaysiaYemen Nigeria Trinidad and Tobago EgyptEquatorial Guinea Papua New Guinea Other

Source: SIA Energy created from China Customs data

China Gas Monthly Import by Source


sia-energy.com

Gas Imports by Source (2/3)

8.9

2.8

1.7

0.8 0.3 0.2 0.09 0.08 0.07

0.4

(0.04) (0.1) (0.2)(0.3)

(0.4)

(0.9)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

AUS

(L)

UZB

(P)

TKM

(P)

PNG

(L)

USA

(L)

QAT

(L)

EGY

(L)

TTO

(L)

KAZ

(P)

Other

(L)

MMR

(P)

NGA

(L)

IDN

(L)

GNQ

(L)

YEM

(L)

MYS

(L)

bcm

Import Volume Changes by Source (2016 vs. 2015)


Imports from Australia ramped up, pushed by the executing of new long-term LNG contracts.

Imports from Uzbekistan resumed in 1Q2016, after several times of interrupting in 2015.

Imports from Turkmenistan increased, contributed by the demand of peak shaving in 1Q and expansion of Central Asia China Gas Pipeline (CACG) line.

China imports the first cargo from US contiguous in this August (registered at China Custom in September).

(P) Pipeline(L) LNG


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LNG Imports from Australia Accounted for 46% of the Total

0

2

4

6

8

10

12

14

16

18

20

mm

tpa

Source: SIA Energy

China Active LNG Contracted Volume by Source (End 2016)

0

5

10

15

20

25

30

2011 2012 2013 2014 2015 2016

mm

t

Qatar Australia Indonesia

Malaysia Yemen Nigeria

Trinidad and Tobago Egypt Equatorial Guinea

Papua New Guinea Other Total


China Annual LNG Imports by Source


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China’s city-gate price regulation follows closely with Central Asian pipeline gas import costs. Imports at Rudong LNG terminal represent the 16% slope oil-indexed contracts signed in seller’s market. Imported LNG became more cost competitive in coastal areas since 2H2015.

Gas Imports Prices Dropped Remarkably Since 2H2015

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan-1

4

Feb-1

4

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-

14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Feb-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-

15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-

16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

CN

Y/c

ubic

mete

r

GD/SH Non-residential City-gate Price vs. Imported Gas Cost

GD/SH Non-residential City-gate Price CAGP Imports cost@GD/SH

Imported LNG Cost@Zhuhai Imported LNG Cost@Rudong

Source: SIA Energy created from China Customs data*Imports cost includes VAT and refunds, regasification and transmission cost


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NOCs Marketing Pressure is Mounting: Volume more than Price

0

10

20

30

40

50

60

Active contracted volumeby end 2014

Contracted volume incremental2015-2017

Contracted volume incremental2018-2020

mm

tpa

CNOOC PetroChina Sinopec JOVO ENN Huadian

China Contracted LNG Volumes by Player

Source: SIA Energy* Contracts only include SPAs and HOAs, but exclude upstream equity volume

Near 20 mmtpa contracted volume comes online in the period


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Under the pressure of over 21 mmtpa TOP obligation in 2016, CNOOC has almost halted spot purchase and diverted some cargos to other markets. SIA has observed substantial import increases from CNOOC’s Ningbo, Zhuhai, Fujian terminals this year, indicating the positive results of its negotiation/compromises with downstream clients.

CNOOC: Fulfilling TOP Obligation and Securing Domestic Market Share Is Now Top Priority

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-

16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

mm

t

Australia Brunei

Indonesia Malaysia

Norway Papua New Guinea

Peru Qatar

America

CNOOC LNG Monthly Import by Source

Source: SIA Energy, China Customs' data

Australia

52.5%

Brunei

0.4%

Indonesia

15.8%

Malaysia

12.5%

Norway

0.8%

Papua New

Guinea

0.5%Peru

0.8%

Qatar

16.1%

America

0.8%


CNOOC LNG Import Mix 2016(16.3mmt)


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PetroChina has less over-contract burden compared with its two NOC peers. It has been active in spot and swap purchase taking the advantage of low spot LNG prices during the non-peak seasons, while pushing Qatar LNG offtake obligation to the winter.

PetroChina: Less Historical Baggage, Active in Spot Purchase During the Non-peak Season

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-

16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

mm

t

Australia IndonesiaMalaysia NigeriaOman Papua New GuineaPeru QatarRussia Trinidad and TobagoAmerica


PetroChina LNG Monthly Import by Source

Australia

32.9%

Indonesia

2.5%Malaysia

1.0%Nigeria

4.8%Oman

1.1%

Papua New

Guinea

2.8%

Peru

2.3%

Qatar

44.3%

Russia

4.8%

Trinidad

and Tobago

2.2%

America

1.3%

Source: SIA Energy createdfrom China Customs data

PetroChina LNG Import Mix 2016(5.3mmt)


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Sinopec’s minimum TOP volume is approximately 5 mmtpa in 2016, an impossible mission for the company. Sinopec resold part of its contracted cargos to PetroChina, CNOOC and other Asian LNG importers, and played as an aggressive new entrant in domestic market, especially through trucked LNG distribution. Following the commissioning of APLNG Train 2, more resell from Sinopec is expected in 2017.

Sinopec: Deploying Multiple Monetization Routes to Digest the Mounting TOP Volume

0

50

100

150

200

250

300

Dapeng (

CN

OO

C)*

Putian (

CN

OO

C)

Shanghai…

Nin

gbo (

CN

OO

C)

Zhuhai (C

NO

OC)

Tia

njin (

FSRU

)

Yangpu (

CN

OO

C)

Dongguan (

JOVO

)

Caofe

idia

n…

Rudong (

Petr

oChin

a)

Dalian (

Petr

oChin

a)

Shennan (

Petr

oChin

a)

Qin

gdao (

Sin

opec）

Beih

ai (S

inopec）

10,0

00 t

onne

Trucked LNG distribution LNG imports

Source: SIA Energy*Dapeng imports excludes NWSLNG imports, of which most is regasified

Trucked LNG Distribution by Terminal 2016

Australia

45.3%

Papua New

Guinea

54.7%


Sinopec LNG Import Mix 2016(3.5mmt)


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Trucked LNG Market Share Rapidly Expand, Competing and Complementing with Pipeline Distribution

5.7%

7.4%

9.5%

0%

2%

4%

6%

8%

10%

0

5

10

15

20

25

2014 2015 2016

mm

t

China Trucked LNG Supply (2014 – 2016)

Land-based LNG Production

Imported LNG via Terminals

Market Share (R-Axis)

Source: SIA Energy

36%

39%


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Higher oil price will be needed to boost investment in domestic unconventional gas, especially coal-based synthetic gas (SNG) & shale gas.

Unconventional Gas Supply Outlook

0

20

40

60

80

100

120

140

2005 2010 2015E 2020F 2025F 2030F 2035F 2040F

bcm

/aCBM CMM Shale Gas SNG Coal Oven Gas

Source: SIA Energy

China Unconventional Gas Production Forecast ($80/b)

0

20

40

60

80

100

120

140

2005 2010 2015E 2020F 2025F 2030F 2035F 2040F

bcm

/a

CBM CMM Shale Gas SNG Coal Oven Gas

Source: SIA Energy

China Unconventional Gas Production Forecast ($50/b)


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China Gas Supply Outlook 2030

(50)

-

50

100

150

200

250

300

350

400

450

500

550

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015E

2016E

2017F

2018F

2019F

2020F

2021F

2022F

2023F

2024F

2025F

2026F

2027F

2028F

2029F

2030F

bcm

Uncontracted LNG Imports

Contracted LNG Imports

Contracted Pipeline Imports

Coal Oven Gas

CBM+CMM

SNG

Shale Gas

Domestic Conv Exploration

Offshore Conventional

Onshore Conventional

Gas Exports

Gas Storage

Real Gas Demand

Source: SIA Energy

China 2030 Gas Supply-Demand Balance

13th Five Year Plan Target


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Content

China Gas Demand

China Gas Supply





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Current Government Controlled Reference Prices for Non-Residential Pipeline Gas at Provincial Gates


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/ Timeline

Wellhead price

control

Pilot reform in

Guangdong & Guangxi for WEP-2

Nationwide expansion of

oil-linked import parity

netback pricing

Converge base &

incremental non-

residential city gate

prices

Seasonal pricing

emerges; fertilizer feed

gas price deregulated; Pilot reform

of Fujian WEP-3 city gate price

liberalization

Remove of regulated

non-residential city gate

prices national

wide

How China’s Gas Pricing Reform Has Evolved

2011 20132014-

20152016

2017-

2018

Oil-linked Import Parity NetbackCost PlusMarket

Pricing?


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Unfolding Price Reforms in 2016

Revamped pipeline tariff-setting regime with new regulations

Abolished city gate pricing regulation in Fujian: West-East Pipeline (WEP) gas will not be subject to government-set benchmark price, instead, they will be negotiated and determined exclusively by seller and buyer

Introduced market-based rates for storage services & storage gas procurement/sales

Deregulated prices for fertilizer producers

CNPC announced 10-15% city gate price hike during winter season (Nov. 20, 2016 to Mar. 15, 2017)


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Price not subject to government control Price/tariff subject to provincial government control

Price/tariff subject to NDRC control Price/tariff subject to local government control

Next Reforms are Focused on Breaking Three Layers of Supply Monopolies and Regulate Midstream Tariffs

Inter-provincial Pipeline (non-direct supply)

Offshore Gas

Liquefaction/ Compression

Regasification

Unconventional Gas

Unconventional

Gas

Pipeline Gas

Imports

LNG Imports

Transport

Provincial Grid Distribution

Commercial

Power

Industrial

Residential

Inter-provincial Pipeline

(direct supply)

City Gas Distribution City Gas

DistributionTrucked LNG

Terminal Associated Pipelines

Pipeline Imports

Onshore Conventional

No TPA access to NOCpipelines and terminals

Monopoly in Wholesale & Transport

Exclusive Marketing Rights

Source: SIA Energy

Control lifted in Fujian


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Third Party Access to Pipeline/LNG

Terminals

Supply Competition

Price Discovery & Disclosure

Standardized Trading Contract

OTC Brokered Trading

Non-physical Players Enter

Futures ExchangeLiquid Forward

Curves Developed

Indices Derived for Long Term

Contracts

Establishing a Pricing Hub Takes Time and Commitments


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Shanghai Oil & Gas Exchange, Despite Having Strong Government Backing, There is Still a Long Way to Go

Pipeline Tariff Regulation

Establish of Shanghai Exchange

Shanghai Oil & Gas Exchange

International Legal and Language

Environment

No Gov’t Interference in Prices & Free Capital

Flow

Supply Competition

TPA to Infrastructure

Futures Market and

Liquidity

Transparent & Timely

Data

Deregulate Non-

Residential City Gate

Prices

Multiple Gas Sources and Substantial Market Size


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Content

China Gas Demand

China Gas Supply





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Supply Source SupplierRisk to Cut

Reasons

Domestic Onshore Conventional Gas

CNPC, Sinopec

• Sichuan sour gas will still grow, but face marketing and infrastructure challenges; Ordos gas may slow due to budget cut

Domestic Offshore Conventional Gas

CNOOC• Existing production will continue, but Liuhua 29-1 and Lingshui deepwater

development may be delayed

CBMCNPC, CNOOC

• Small production, developed infrastructure, but challenging economics under low prices

Shale GasSinopec,CNPC

• Shale gas success has political significance to NOCs• Secured budget and drilling plans

SNGSinopec, CNOOC, Other

• Huge environmental challenges• LNG marketing will be prioritized over SNG; Xin-Yue-Zhe south part will be

first built to market Sichuan gas

Central Asian Pipeline Gas

CNPC• Take or pay, but with Chinese financing, terms will be more flexible• Price is not competitive at Eastern coast at $50/b oil

Myanmar Pipeline Gas

CNPC• Myanmar gas is not competitive at Southwest or South coast• Take or pay, small volume (with phase II delay), pipeline under-utilized

Russian Pipeline Gas (Power of Siberia)

CNPC• Cost is competitive but upstream and financing challenges remain• project will be delayed to post-2022

Contracted LNGCNOOC, CNPC, Sinopec

• Take or pay• Over-contracted, NOCs have to resell at least 2 mmtpa to international

market, or default

Under-construction LNG Terminals

2nd Tier Players

• Demand driven (market pull)• Competitive price

We See a Conflicting Story in LNG Imports


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Who Are the Emerging 2nd-Tier LNG Importers

Who are taking actions ? Who may take actions ?

Gas Power Plants

LPG Distributors/ Oil Players

Integrated Players

City-gas Operators

Provincial Gas Grids

Source: SIA Energy


sia-energy.com

Unlike NOCs, Tier-2 Players Are Mostly Downstream Driven

E&P Conven.

Shale Gas SNG

Long Distance Pipeline Storage SSLNG

LNG Imports

LNGDistrib’n City-gas

GasPower

CNPC

Sinopec

CNOOC

Guanghui

ENN

Huadian

Shenzhen Gas

Guangzhou Gas

Beijing Gas

BeijingEnergy

Core operations Developing position Nascent positionLittle presence;

not a focusSource: SIA Energy


sia-energy.com

They Come at the Right Timing

Global glut in LNG

Below $5/mmbtu DES spot price during the non-winter seasons

~11.5% slope vs. oil parity contracts signed by the NOCs

Higher level of flexibility in delivery destination, take-or-pay obligation, contract duration, etc.

Domestic reform underway

Anti-corruption campaign handicapped the NOCs

Direct sales is encouraged to bring down end-user gas cost, boost gas consumption

TPA is encouraged by law; further reform is under way

Investment approval for LNG import terminals may be delegated to the provincial gov’ts


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Market Security

Government Support

InfrastructureAccess

Financial Capability

ProfessionalExperience

Second-tier Players

NOCs

Although Tier-2 Players Are Still Weaker than NOCs in Many Perspectives, They Are Learning and Growing Fast

Secured market, often the premium market with high affordability

Close to end users Established distribution channels

Weaker central government support Strong local government support for

bringing supply and infrastructure competition

Local tax payer

Lack of professional team

Undetermined about pricing preference & term vs spot purchase

Prefers HOAs to SPAs to start with

Difficult terminal TPA access Self-operated terminals often have berth

capacity constraints No pipeline access except for provincial grid

companies

Private players have weaker balance sheet and lower credit rating compared to NOCs

But large state-owned power GENCOs have deeper pocketsSource: SIA Energy


sia-energy.com

In spite of the low utilization of existing terminals, there were only six TPA cases executed, five of which were Beijing Gas, only one for private player. Major challenges include：1) Very few LNG terminals offer TPA, on ad hoc basis; 2）TPA mostly offered to large state-owned city gas; 3）Facing HQ resistance；4）No regas and pipeline access；5）Windows to private players are offered in lowest demand months.

TPA at Existing LNG Terminals Proved to be Challenging

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-

16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

mm

t

Beijing Gas (Australia) Beijing Gas (Egypt)Beijing Gas (Norway) Beijing Gas (Singapore)China Gas (Nigeria) JOVO (Belgium)JOVO (Indonesia) JOVO (Malaysia)


Tier-2 LNG Monthly Import 2016

Tier-2 players imported 1.0 mmt LNG in 2016, and most of them is received by JOVO, who owns the Dongguan LNG terminals. Only 5.5 spot cargos were imported via TPA in the whole year, five by Beijing Gas and half by China gas, all via CNPC’s Caofeidian Terminal.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

1

2

3

4

5

6

7

8

9

Dapeng (

CN

OO

C)

Fujian (

CN

OO

C)

Shanghai (C

NO

OC)

Nin

gbo (

CN

OO

C)

Zhuhai (C

NO

OC)

Tia

njin (

CN

OO

C)

Hain

an (

CN

OO

C)

Dongguan (

JOVO

)

Tangshan (

CN

PC)

Jiangsu (

CN

PC)

Dalian (

CN

PC)

Shennan (

CN

PC)

Qin

gdao (

Sin

opec)

Beih

ai (S

inopec)

mm

t

Unutilized Capacity Import volume Annual utiliazation rate (R-axis)


2016 Utilization of China LNG Terminals


sia-energy.com

In Addition to the Three Under Construction Tier-2 LNG Terminals, Many More Have Been Proposed


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Questions From the Sellers: Who Are Ready to Sign SPAs? What’s Their Purchasing Power?

HO

A &

SP

A

Se

cu

red

Terminal

Preparation

Site selection

and market study

Provincial level approval

NEA approval (for large-

scale greenfield)

Under construction Commissioning

1 m

mtp

a2

mm

tpa

3 m

mtp

a

1 mmtpa 20-yr SPA with BP 1 mmtpa 10-yr HOA with Chevron 0.6 mmtpa equity entitlement from PNW 0.5 mmtpa 20-yr HOA with PETRONAS

0.65 mmtpa 10-yr SPA with Chevron 0.5 mmtpa 10-yr SPA with TOTAL 0.28 mmtpa 5-yr SPA with Origin

0.5 mmtpa 5-yr SPA with PETRONAS

0.5 mmtpa 5-yr KTA with Chevron

0.5 mmtpa 5-yr HOA with PETRONAS

1 mmtpa 20-yr HOA with Pacific Oil & Gas

10 spot cargo from Engie


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Content

China Gas Demand

China Gas Supply






Japan and China Share Critical Common Ground and Have Opportunities to Collaborate Along the Entire Value Chain

• Domestic energy

security concern

as large importer

• Domestic market

reforms

• Over-contracted

LNG and desire

for contract

renegotiation

• Overseas value

chain

participation

• Regional

development

opportunities

• Regional pricing

hub

China• Growing

domestic gas consumption

• Large domestic production

• More diversified gas sources

Japan• Better financial

credit • More experience in

international trade• More experience in

liquefaction• Clean technology



Chinese Market

Regional Market

Regional Hub

Opportunities in Physical and Paper Trading

Regional pricing

Paper market

Forward curve and price index

LNG re-distribution

Contract re-negotiation

FOB/US tolling model

Spot LNG trading

Small terminal demand aggregator


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