Fuel starved
Coal consumption in selected world regions, 1990-2035 120
100 80 60 40 20 0
Source: EIA For CNOOC, the biggest hurdle to
bringing its business onshore is its lack of infrastructure. To get gas to market, it would either have to form an agree- ment to pipe gas through the networks of CNPC or Sinopec, or shell out to build its own pipelines. Te decision to take a majority stake in CUCBM may indicate that CNOOC has already picked the second option.
to be onshore and the other two are per- mitted to be offshore.’ And that’s a slight change in rhetoric from what we were hearing before, even a few months ago,” said Hewitt. CNOOC is smaller than its rivals but
is far more profitable since it is insulated from China’s tightly controlled market for refined products. CNOOC has spent US$17.6 billion on foreign acquisitions since 2005, when it launched its famous failed US$18.5 billion bid for Unocal – a deal that would have doubled the com- pany’s crude oil and gas production.
Forward thinking
Whether construction is led by CNPC or a new player, however, an extensive pipe- line network could be built fairly quickly. “It took less than four years to build the Rockies Express Pipeline, one of the largest pipelines in North America, from start to finish,” said Samantha Santa Ma- ria, associate editor of Platts’s Gas For- ward Curve. CNPC announced earlier this year
that it plans to have 540,000 km of pipe- line installed by the end of 2015, double the length it laid by the end of 2010.
With technology transfer only just
begun, China’s oil majors are likely to continue snapping up stakes in uncon- ventional plays abroad. Since technolo- gies for extracting unconventional energy are still evolving, these companies are aiming at a moving target. Sinopec, China’s second-largest na-
1990 Other non-OECD Asia India China 2035 Rest of world
tional oil company, has lagged behind PetroChina and CNOOC in acquiring unconventional energy projects. But there are signs that it is catching up – it bought a US$4.65 billion stake in ConocoPhil- lips’ Canada oil sands venture in 2010 and a share of an Australian CBM venture owned by ConocoPhillips and Origin Energy in February. For further acquisitions, the national
oil companies will probably continue to look to North America, where projects are plentiful and prices are low. Buying upstream reserves and liquefaction points to ship gas back to Asia makes sense from a strategic perspective, according to Hewitt at CLSA. One target could be Cheniere Energy,
which recorded a net loss of US$76 mil- lion in 2010. Te company is converting its re-gasification terminal on a deep- water port in the Gulf of Mexico into a liquefaction point, in hopes to send the majority of its LNG through the Panama Canal by 2014, when a new wider lane in the canal is scheduled to open. Further investment could also tar-
get the American northeast, said Santa Maria of Platts. US billionaire Phil
China Economic Review • May 2011
35
Quadrillion btu
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