Good report issued by Goldman Sachs just now. Some very postive comments made:
“Last week we visited gas industry players in HK, Beijing, Tokyo and Seoul with investors. The outlook for China gas/LNG imports has strengthened, given strong structural demand growth and limited domestic supply potential. We expect a tight physical gas market in China over the next 2-3 winters, with Russian pipe supplies (2019-20) now welcomed.”
“Key highlights:
China’s strong gas market growth has created challenges – Gas demand grew 19% YTD yoy, and with heating season now in full swing, some supply shortages have emerged. Conflicting interests drive different perspectives (e.g. some flag a “supply crisis”, some call for higher wholesale prices and some reiterate the call for terminal open-access). Domestic suppliers will raise capex (driving some growth), but this multi-year transformative growth will largely be met by imports (pipe & LNG). GSe c.65mtpa 2020 LNG demand; we expect each c.1% increase in China 2020E gas demand to require another c.2.5mtpa of LNG.”
“China gas value chain – opportunities and risks
China natural gas demand growth has delivered extraordinary growth year-to-October (+19% yoy, NDRC). This offers a lot of confidence to all the stakeholders we met in the tour for China to achieve the 2020E government target of 8.3% to 10% of total primary energy consumption. Most of the companies we met are still looking for high teens gas demand growth in 2018E.”
“Domestic Upstream E&Ps are well positioned to grow supply at healthy margins, and are therefore this segment appears very well positioned (particularly basins such as Ordos that are close to market).”
SEH Price at posting:
13.0¢ Sentiment: Buy Disclosure: Held
