Energy & Resources Talking Points | 29/09/2016

EnergyTPB

In today’s talking points: Chinese oil as ‘wildcard’ for global oil prices and market dynamics; China’s development plans introduced in energy conference; China cuts subsidies in green energy technology after being largest developer for 8 years; Djibouti’s $4 billion investment based on expected Chinese demand. 

Chinese oil as ‘wildcard’ for global oil prices and market dynamics 

As the world’s second largest oil consumer, China has been a major importer of oil in recent years, and been taking advantage of low prices and supporting global oil demand growth. Oil experts believe that the PRC has the ability to take advantage of any rise in prices and use its oil stockpiles as exports, which could lead to the disruption of any attempts to balance markets. The problem is the secrecy China has about its stockpiles. Dave Ernsberger, global head of oil content at S&P Global Platts, suggests that China’s strategic petroleum reserve is a challenge for markets. However, the fall in demands for oil in the country also creates an unsettling situation for OPEC and all producers of crude and refined products. As Ersnberger states: “Demand picture is fairly frightening from a producers’ point of view”.

Read more at: CNBC News

China’s development plans introduced in energy conference

International Atomic Energy Agency (IAEA) held its annual conference in Vienna. China’s new reactor was introduced – it is the world’s first Small Modular Reactor, which has the capacity of less than 300 megawatts, can provide heat and power supplies, sea water desalination and other purposes. The Chinese delegation also released in the conference on its nuclear industry development. China-developed Hualong One technology has won the recognition globally for the first time and increasing nuclear power generating units are operating in the country as well. Peaceful use of nuclear power and sustainable development will be emphasised, according to Chinese nuclear officials.

Read more at: CCTV News

China cuts subsidies in green energy technology after being largest developer for 8 years
 
After leading the green energy industry worldwide for almost a decade, the Chinese government is now adjusting subsidies in the industry on the back of the economic slowdown in the country. China has been the leader of installing wind and solar farms globally, and provided around a third of all investments within the industry. The country shapes the whole market in terms of its influence, having helped decrease costs of electricity from low-polluting sources. A drop in installations of wind and solar farms next year and a decrease in subsidies for the business will most likely have huge impacts globally.

 

Read more at: The Straits Times

Djibouti’s $4 billion investment based on expected Chinese demand
 
Djibouti has invested in a $4 billion liquefied natural gas pipeline in efforts to cement itself as an energy trans-shipment hub for East Africa. Natural gas is the country’s fastest growing major fuel having quadrupled within the last decade. The project will include a 700km pipeline from Ethiopia to Djibouti which will be able to transport up to 12 billion cubic metres of natural gas every year. The project come from efforts by Ethiopia and Djibouti to meet long-term demand for liquefied natural gas in China. Chinese consumption of the natural gas is expected to increase from 2020.

 

Read more at: Oil Price news