Energy & Resources Talking Points | 10/01/2017

energy-resources-tpIn today’s talking points: China takes the global lead in clean energy; Mining and energy exports to deliver bonus billions to Australian economy; CNPC and Sinopec strive for company reform; Air Products makes offer to buy China’s biggest producer of industrial gases.

China takes the global lead in clean energy

In 2016 China’s overseas investment into renewable energy increased by 60 percent to a record US$32 billion, marking its leadership in the clean energy market. 2016 saw China finalise 11 foreign deals worth around US$1 billion each and, according to the Institute for Energy Economics and Financial Analysis (IEEFA), is expected to increase in 2017. China’s emerging dominance of the clean energy sector has seen it become the global leader in renewable energy investment and has led to millions of jobs for the economy. The International Energy Agency (IEA) estimates that China holds 3.5 million of the 8.1 million renewable energy jobs globally. The Chinese National Energy Administration said the nation’s renewables sector would generate at least 13 million jobs by 2020. China’s shift towards the renewable energy industry has now seen it outperform the US in domestic renewable energy, investing more than double the US in 2015. Only last week, China announced that it would invest at least US$361 billion into renewable energy resources by 2020. China is leading the way in renewable energy and will only continue to increase investment as the world becomes more aware of the benefits it brings.

Read more at: Taipei Times

Mining and Energy exports to deliver bonus billions to Australian economy

Australian mining and energy exports are set to reach a record $204 billion this year in a “ray of light” for the economy that could prevent the downgrading of Australia’s AAA credit rating. According to government forecasts issued on Monday, unexpected price surges in iron ore and coking coal are set to add $47 billion to export income alone in 2017. However, the government’s chief commodity forecaster warned that the unexpected price surges would not last long and that the prices could have an equally dramatic fall. The new forecasts, to be released­ in the department’s quarterly resources and energy report­, come with a warning that the good times for prices probably will not last, as commodities supply increases and Chinese housing demand slows. “The combination of slowing demand growth from China’s steel sector and increased global supplies are expected to lower export unit values in 2017-18,” said Mark Cully, the Department of Industry, Innovation and Science’s chief economist. The impact of Donald Trump’s US presidency is unknown, but points mainly to positive outcomes for Australia. While the effects on Australia’s resource export earnings in uncertain, Mr Trump’s plans to cut taxes and increase infrastructure spending could increase US demand for Australian produced raw materials.

Read more at: The Australian

CNPC and Sinopec strive for company reform

In the aftermath of reforms initiated to transform two Chinese oil and gas giants, China National Petroleum Corp (CNPC) and Sinopec, shares of the companies rebounded during the first week of 2017. It is likely that surge came after domestic investors became confident that the profit of the two giants would rise due to the reforms “which are necessary to help them stay competitive in the long term,” said Gordon Kwan, head of oil and gas research for Asia at Nomura Securities. Whilst, previously, CNPC oil and gas pipeline operations and sales were integrated by the state-owned group thus “ruling out market competition”, the company opened its first regional gas sales company in Guangzhou last Sunday to sell natural gas under a market-oriented pricing system that harnessed “third-party participation” to enable other suppliers to sell gas developed by CNPC, said Deng Yusong, vice president of the Market Economy Institute at the Development Research Center of the State Council. Not to be outdone, as part of a reform would transform the unit into a mixed-ownership entity, last Wednesday Sinopec hired six banks to give advice on its restructuring of a fuel distribution unit to pave the way for a Hong Kong initial public offering to “raise about US$12 billion,” Reuters reported, citing an individual familiar with the matter.

Source: Shanghai Daily

Air Products makes offer to buy China’s biggest producer of industrial gases

Following recent industry trends of global consolidation, triggered by French rival Air Liquide SA’s takeover last year of Airgas Inc., Air Products & Chemicals Inc said it made an offer to buy China’s biggest producer of industrial gases, Yingde Gases Group Co. The news sent shares of Hong Kong-based Yingde up the most in more than a year on Monday after the stock resumed trading following a Dec 23 halt. However, an agreement is yet to be reached and there’s no certainty a deal will be concluded, the US company said in the statement.

Source: China Daily / Bloomberg