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March 2016
Issue 118
Asia Pacific
Oil and Gas
BMIs monthly market intelligence, trend analysis and forecasts for the oil and gas industry across Asia Pacific
CHINA
ISSN: 1750-7723
CONTENTS
China............................................................................................... 1
Shale Gas Target Remains Out Of Reach................................................................. 1
Strong Energy Demand Despite Economic Headwinds.............................................. 2
Japan............................................................................................... 3
Nuclear Return To Weigh On Gas Demand.............................................................. 3
South Korea..................................................................................... 4
Gas Demand To Fall Amid Nuclear Resurgence........................................................ 4
India................................................................................................ 5
Rajasthan Redevelopment Plan To Slow Crude Decline............................................. 5
Shale Gas And CBM To Remain Underdeveloped...................................................... 5
Pakistan........................................................................................... 6
Exploration Pipeline Poses Long-Term Reserves Upside............................................. 6
Myanmar......................................................................................... 7
Long-Term Fuels Demand Growth Outlook Remains Bullish...........................................7
Australia.......................................................................................... 8
NWS Expansion Offers Post-2019 Gas Upside.......................................................... 8
New Zealand.................................................................................... 9
Shell's Potential Exit Aligns With Bearish Upstream Outlook...................................... 9
China is set to fall short of meeting its stated annual shale gas production
target of 6.5bn cubic metres (bcm) by end-2015, as of the time of writing.
A combination of complex geology, a deficit in physical infrastructure
and diminishing investor appetite for high-cost unconventional projects
amid plunging oil prices have led to weaker-than-anticipated shale gas
output from the nation's two largest producers, PetroChina and China
Petroleum & Chemical Corporation (Sinopec). This will see shale
remain a relatively small component of China's natural gas production
over 2015-2024, stunting the government's plans to replicate the US
shale boom in the country.
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www.oilandgasinsight.com
China
Asia
e/f = BMI estimate/forecast. Source: China National Bureau of Statistics, China General
Customs Administration, Bloomberg, EIA, BMI
Hubei
9.5
1.55
Jiangxi
0.6-1.1
Hunan
1.5-2.0
Henan
n/a
Zhejiang
n/a
10.48
Jiangsu
Chongqing
Guizhou
n/a = not available. Source: China Ministry of Land & Resources, BMI
www.oilandgasinsight.com
Japan
Asia
2015 to increase 3.3% y-o-y, according to data from the China Association of Automobile Manufacturers (CAAM). Our Autos team
expects this uptrend in sales to persist through to 2020, as consumer
appetite for big-ticket items such as cars gradually recovers, supporting sustained gasoline demand from the transportation sector.
JAPAN
This trend looks set to continue over the coming years, as the
Chinese economy continues to shift away from an investmentdriven model to a consumption-driven one. This aligns with our
Country Risk team's expectation for China's economic woes to
persist, which will weigh on Chinese demand for refined fuels over
the next few years (see 'High Frequency Data: Economy Continues
To Cool', December 3 2015). Diesel demand growth in particular is
set to underwhelm due to a sharp slowdown in manufacturing and
industrial activity.
Nevertheless, we note that China's gasoline demand will remain
relatively intact amid a broader slowdown in its fuels demand. In
September 2015, the government halved the tax on purchases of
small-cars (vehicles with engine capacity of 1.6 litres or less) until
end-2016, which has led car sales through the first 11 months of
www.oilandgasinsight.com
South Korea
However, we highlight that continued public opposition to largescale nuclear restarts will likely see the government to miss out on
its ambitious aim to generate about 20.0-22.0% of total electricity
from nuclear energy by 2030. Nevertheless, we expect to see between one and three reactors to come back online annually over the
next 10 years. At the time of writing, our Power team expects the
share of nuclear energy in Japan's total generation mix to increase
from 0.5% to 11.6% over 2015-2025 while gas generation falls (see
'Nuclear Back In The Power Mix, But Opposition To Remain High',
August 11 2015).
Asia
SOUTH KOREA
www.oilandgasinsight.com
India
Asia
INDIA
f = BMI forecast. Source: Ministry Of Petroleum & Natural Gas, EIA, BMI
www.oilandgasinsight.com
India's shale gas and coal-bed methane (CBM) will remain underdeveloped as long as alternative energy sources, such as LNG imports and coal, continue to be competitively priced. Nevertheless,
Prime Minister Narendra Modi's government is exploring ways to
attract investments into India's unconventional resources, to ease a
mounting dependence on imported fuels.
Pakistan
Asia
PAKISTAN
www.oilandgasinsight.com
Myanmar
Asia
forecasts lie to the upside, supported by the strong pipeline of exploration projects in Pakistan's prospective acreages. According to
our Upstream Projects Database, there are currently 16 projects in
the exploration phase together with seven discoveries (albeit small)
made in 2015 alone, any of which could uncover additional reserves
and boost domestic supplies.
The Pakistani government has been actively trying to incentivise
firms to push forward with development plans at existing discoveries amid slowing upstream activities due to low oil prices. On
September 1 2015, the government hiked gas prices for domestic
consumers and industrial users. This in turn allows it to pay firms
more for gas and thus, encourage greater investment in the country's
upstream segment even as global prices remain persistently weak
in line with low oil prices (see 'Price Hike No Panacea For Gas
Shortfall', September 9 2015).
MYANMAR
Date
Type of Project
Companies
May-15
Natural Gas
Jul-15
Oil
Aug-15
Pakistan Petroleum
Khewari Licence
Sep-15
Gas
OGDCL
Karak Block
Sep-15
Sep-15
Dec-15
Oil
www.oilandgasinsight.com
Australia
AUSTRALIA
Asia
www.oilandgasinsight.com
New Zealand
Asia
NEW ZEALAND
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