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It’s always in the news – China’s manufacturing overcapacity, the concomitant slowing of industries … you’d be forgiven for crossing the energy sector off your list of investments. But Glenn Corrie, Managing Director of Sinogas, thinks otherwise. He’s in China for the long run – and specifically in natural gas.
Glenn talks us through why his business is particularly lucrative and also socially conscious. He discusses why listing on the Australian Securities Exchange (ASX) is so crucial to a company that nonetheless operates exclusively in China.
Though energy is a sector dominated by the big state-owned enterprise players in China, Sinogas has reaped the fruits of symbiotic relationships with PetroChina and CNOOC Group. Glenn shares his personal experience overcoming that thorny, perennial issue of non-payment in China and elaborates on how to build a dream team.
To find out more, visit the Sinogas website.
Check out Glenn’s book recommendation, Mr China by Tim Clissold, right here.
And don’t forget…
The AustCham Podcast is now available on iTunes! Visit the iTunes Store and subscribe to have the latest episodes delivered straight to your phone.
Want a taster before you click play? Here’s an excerpt to whet your appetite:
S: With diminishing demand in the manufacturing sector in China, how does Sinogas deal with that shift in demand for energy?
G: Our long-term view of gas demand is very strong, we see gas demand in the longer term still growing between 7-9% year on year. If you compare that with some other jurisdictions in the world, it’s still probably 2-3 times the gas demand growth. In fact, China is growing, from a gas perspective, faster than any other country in the world. You’re right, the economy has slowed during the transition from industrial-based economy into more a consumption- and service-led economy, but there is another important aspect of the country in that environmental issues are a big challenge.
Economic growth, albeit not double digit anymore but still very high with the government forecasting 6.5-7% this year and then 6.5% year on year after that, will give rise to fairly substantial energy demand, but the real driver for accelerated gas demand growth is environmental policy and environmental regulations. Pollution is an issue, and the government is now putting in place strong policy to mitigate the effects of pollution. A big part of that will be gas – gas is a clean fuel, certainly much cleaner than coal, and the government has stipulated that they want to see 10% gas by the end of the decade. It’s currently 5.5% at the moment, so it’s a big initiative. We are seeing direct action to achieve that at the moment, and we’re very confident that gas demand growth will continue to rise over and above the growth of coal, which will still be base load in the energy mix, but gas should outstrip most primary fuel sources in the country beyond the end of the decade.
We just recently received an award from Mofcom (Ministry of Commerce) for our contribution to the environment here as a company, which is a great accolade for us as a small, growing company. We will be producing 2-3% of China’s natural gas supply by the end of the decade, which is in turn helping China achieve its own environmental and gas policy requirements.
Excerpt edited for brevity and clarity.