BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Oil & Gas Sector Of China

The latest China Oil & Gas Report from BMI forecasts that the country will account for 32.3% of Asia/Pacific regional oil demand by 2010, while providing 46.0% of supply. Asia/Pacific regional oil demand rose to an estimated 24.74mn b/d last year and should average 25.36mn b/d in 2007, before reaching 27.64mn b/d by 2010. Asia/Pacific gas consumption in 2006 is estimated at 419bcm, with demand of 602bcm targeted for 2010. Production last year of 342bcm should reach 490bcm by the end of the decade. China’s share of consumption in 2006 was an estimated 14.3%, while its share of production is put at 15.5%. By 2010, its share of demand is forecast to be 19.4%, with the country accounting for 13.1% of supply.

For the whole of last year, our preliminary estimates of average prices are US$61.30 per barrel for the OPEC basket, US$65.03 for Brent, US$66.24/bbl for WTI and US$61.30 for Urals. For 2007, the revised BMI forecasts are for the OPEC basket to average US$55 per barrel. Based on last year’s typical price differentials, this implies Brent at US$58.72, WTI averaging US$59.94/bbl, and Urals at US$55 per barrel. Our central view is that the OPEC basket price will slip from US$55/bbl this year to US$50 in 2008, before settling around US$45/bbl in 2009/2010.

Chinese real GDP growth is forecast by BMI at 9.6% for 2007, down from an estimated 10.5% in 2006. We are assuming 9.4% growth in 2008, 8.7% in 2009, followed by 8.0% in 2010. While partly privatised, the oil and gas industry remains under state control, with PetroChina, Sinopec and CNOOC charged with maintaining domestic production. We are assuming oil and gas liquids output of no more than 3.54mn b/d by 2011, although the country is thought to have pumped 3.67mn b/d last year. Oil consumption is forecast to increase by around 28% between 2006 and 2011, implying demand of 9.39mn b/d by the end of the forecast period. The import requirement would therefore be approximately 5.85mn b/d by 2011.

In the BMI Business Environment Ranking matrix, China receives an unchanged composite score of 32, which still ranks the country equal fifth out of 14 states included in the Asia/Pacific region, alongside South Korea. The overall business environment can be considered moderately attractive in a regional context, with a high level of perceived political risk being offset by strong and sustained energy demand growth. There is a healthy oil/gas reserves position and the development of a reasonable competitive framework involving international oil companies (IOCs) and local companies. Economic risk is viewed as moderate, while the regulatory regime needs to make more progress. However, China is the key Asian country in terms of short-, medium- and long-term oil/gas demand growth, which is the overwhelming area of appeal for energy sector investors.

BMI's Country Oil and Gas Reports - Sample Contents Page

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

China Economic SWOT

China Political SWOT

China Business Environment SWOT Analysis

Chapter 3 - Regional Market Overview

Asia/Pacific Region

Table: Asia/Pacific Oil Consumption (000b/d)

Table: Asia/Pacific Oil Production (000b/d)

Table: Asia/Pacific Oil Refining Capacity (000b/d)

Table: Asia/Pacific Gas Consumption (bcm)

Table: Asia/Pacific Gas Production (bcm)

Table: Asia/Pacific LNG Exports/(Imports) (bcm)

China

Chapter 4 - Business Environment Rankings

China

Asia/Pacific Region

Chapter 5 - China Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Chapter 6 - Business Environment Overview

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Labour Force

Foreign Direct Investment

Tax Regime

Chapter 7 - Oil Market Outlook

Assessing The Risks

Table: Crude Price Forecasts 2007

Revised Forecasts

Table: Oil Price Forecasts

Chapter 8 - Regional Supply and Demand

Asia/Pacific

Table: Oil Production (000b/d) – Asia/Pacific

Table: Oil Consumption (000b/d) – Asia/Pacific

Chapter 9 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 10 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

LNG

Refining and Oil Products Trade

Table: China Oil & Gas – Historic Data & Forecasts

Other Energy

Table: China Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 11 - Economic Outlook

Table: China: Macroeconomic Data And Forecasts

Chapter 12 - Regional Case Study – ConocoPhillips

Table: Exploration And Production 2005

Table: Commercial Realisation – Refining And Marketing 2005

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players – Chinese Oil & Gas Sector

Overview/State Role

CNPC – Summary

Table: Key Upstream Players

PetroChina – Summary

Sinopec – Summary

CNOOC – Summary

BP – Summary

Shell – Summary

Table: Key Downstream Players

ExxonMobil – Summary

Chevron – Summary

ConocoPhillips – Summary

Husky – Summary

Statoil – Summary

Total – Summary

Others – Summary

Chapter 14 - Company Monitor

China National Petroleum Corporation (CNPC)

PetroChina

China Petroleum & Chemical Corporation (Sinopec)

China National Offshore Oil Corporation (CNOOC)

Shell (China) Ltd

BP China

ExxonMobil China

Chapter 15 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Energy Industry

Cross checks

Sources

Network of Asian Oil & Gas Sources

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BMI's Asian Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil & gas industry associations, chambers of commerce and company reports. Information sources include: