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Tank Storage Asia Thomas Ng 30 Sep 2015 v2


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Tank Storage Asia Thomas Ng 30 Sep 2015 v2

  1. 1. Thomas Ng Chairman, The Global Ports Forum Game-Changers in Oil & Gas: Implications for Asia Tank Storage
  2. 2. I Recent Oil & Gas Trends II AIIB, RMB Internationalisation, One Belt-One Road Strategy, etc III Implications
  3. 3. Asia Oil & Gas game-changers • Changing dynamics, game, players and rules • New demand map, changes in energy mix, and unconventional supply sources • Shift in trading and investment patterns • Volatility in prices, technological breakthroughs • Environment, efficiency and climate change • Is energy security a national security matter? • Heightened geopolitical, cyber and other risks
  4. 4. Complex dynamics in Asia • Substantial deposits of rich natural resources • The prizes of the new Great Game - Pipelines, tanker routes, petroleum consortiums and PSCs • AIIB, One Belt-One Road, South China Seas, China Silk Road Fund • East of Baku – it is China and Russia to play • Sanctions against Russia hurt Central Asia • Intra-Central Asian conflicts, political succession risk
  5. 5. Russia to China
  6. 6. Russia pivot to Asia
  7. 7. Central Asia and China… • “Pan-Asian global energy bridge” from Persian Gulf to China • Kazakhstan, Turkmenistan and Uzbekistan in China’s energy security nexus • China to reduce dependence on ME oil, avoid “Malacca Dilemma” and address Xinjiang’s unrest • Kazakhstan and Uzbekistan’s uranium deposits for China’s 30 new nuclear power plants
  8. 8. A showdown between Moscow and Beijing over Central Asia?
  9. 9. China-Europe “Silk Railway” and “Maritime Route”
  10. 10. Some of Asian Oil & Gas projects • China’s energy “Silk Road” over Central Asia • $45 bn Southern Gas Corridor by 2018 • Iraq’s Kurdish gas from early 2018 • Iran is back in the oil and gas game • Turkmen gas to the Caspian and Afghanistan • China’s claims in the South & East China Seas • Mynamar’s new pipeline to Yunan, China • Pakistan’s China Pakistan Economic Corridor
  11. 11. 11 Roles of individual members ASEAN: facilitate economic integration through AEC and ASEAN+1 FTAs ASEAN’s economic role is reinforced by political considerations;  strategic location astride EastAsia’s critical trade routes  neutral position in the traditional tensions of Northeast Asian countries  intermediary role between China/US and China/India China, Japan and Korea: pursue a high level of liberalization for CJK FTA High standards as a platform for RCEP China needs to pursue comprehensive economic reforms Peaceful and Prosperous Regional Economic Order
  12. 12. 12 The Asian Infrastructure Investment Bank (AIIB)  Could be a rival or/and a complement to ADB and the Washington institutions  A countermeasure to the western-dominated development banks(World Bank, IMF, ADB)  A complementary source for infrastructural funds in Asia  Expected to contribute to the regional economic integration in the Asia- Pacific  Need to adopt international best practices  AIIB would need to implement practices of governance, environmental and social safeguards, procurement,etc.  work with or add values to multilateral development institutions (ADB and WB)  Address concerns for China’s infrastructure lending history and practice in Africa  China’s growing economic stature should be reflected in the governance structure of global institutions - Reforms of global institutions are needed Forms of Regional Economic Competition
  13. 13. Authorized Capital in AIIB
  14. 14. AIIB Share Allocations
  15. 15. Signing Ceremony of AA of AIIB, Jun 15
  16. 16. Infrastructure Lending in Asia
  17. 17. 17 Internationalization of the RMB  By the end of 2014, RMB ranked 5th as the most traded currency  According to SWIFT's report, at 2.2% of SWIFT payment behind JPY (2.7%), GBP (7.9%), EUR (28.3%) and USD (44.6%)  The average monthly RMB trade settlement up from CN¥320 billion in 2013 to ¥480bn in 2014  The Renminbi Qualified Foreign Institutional Investor (RQFII) quotas extended to five other countries  UK (15 Oct 2013), Singapore(22 Oct 2013), France(20 June 2014), Korea (18 July2014), Germany (18 July2014), and Canada(8 Nov 2014), each with the quotasof ¥80bnexcept for Canadaand Singapore(¥50bn)  Previously, onlyHong Kongwas allowed,with a ¥270bnquota  The path of RMB internationalizationcan be divided into three phases  Trade finance  Investment  Reserve currency (in the longer term) Other Forms of Regional Economic Competition
  18. 18. 18 Internationalization of the RMB The road to the RMB Internationalization is far from complete Size of the home economy relative to others Economic stability in the form of low inflation, small budget deficits and stable growth Strong official and institutional support Deep, open and well-regulated capital markets (in a deliberately slow progress) opening up of China’s onshore capital market greater access for foreign investors to local capital markets deeper global RMB liquidity and wider cross-border flow channels Other Forms of Regional Economic Competition
  19. 19. RMB Internationalisation: Developments 19
  20. 20. RMB Internationalization: Prospects Micro level: Increase Liquidity Supply and Streamline Reflow process Cut red tapes on approval process for cross-border use of RMB; Expand RMB payment in tourism, shopping and study in foreign countries;  Explore measures to enable overseas public listed company to pay interests and dividend in RMB;  Encourage policy banks and other financial institutions to expand RMB external financing and facilitate overseas development aid in RMB; 20
  21. 21. RMB Internationalization: Prospects Micro level: Increase Liquidity Supply and Streamline Reflow  Promote RMB bond issue in domestic and international market;  Encourage use of RMB as a denominated currency in global outsourcing and commodity transactions;  Encourage use of swap lines and expand financing channels for clearing banks and RMB participating banks in domestic market; 21
  22. 22. RMB Internationalization: Prospects Macro level: Reform, Growth, Infrastructure and Soft Power Expand economic and financial opening up and reform : capital account, interest rate and exchange rate; Sustain strong and stable economic growth;  Upgrade market infrastructure for cross border use of RMB: China International Payment System (CIPS), bond market development, regulation clean-up; 22
  23. 23. 23 RMB Internationalization: Prospects Macro level: Reform, Growth, Infrastructure and Soft Power Improve institutions and international coordination. “One Belt and One Road” strategy . IMF SDR review later this year History may provide a guidance
  24. 24. 24 RMB Internationalization: Prospects Macro level: “One Belt and One Road” strategy
  26. 26. China opens new USD 2.5 bil oil & gas pipeline through Myanmar, Feb 15
  27. 27. Obama opens new chapter in relations btw US & Myanmar, Nov 13
  28. 28. China-Myanmar border conflict – Kokang shells fall. China sent troops to border, May 15
  29. 29. China’s consortium study on new USD 28 bil Thailand Kra Canal, May 15
  30. 30. China consortium study on new USD 28 bil Thailand Kra Canal, May 15
  31. 31. Kra Canal ??– Singapore’s maritime trade dominance along Straits of Malacca challenged ?
  32. 32. Iranian Ports – The Post Sanction Era, Mehdi Rastegary, Sina Ports Iran, Sep 15 • 6 Ports to watch - Chabahar, Shahid Rajaee Port, Bushehr Port, Assaluyeh Port, Imam Khomeini Port, and Khoramshahr. • Chabahar is the port that India is eyeing to develop to compete with Gawdar, Pakistan. • Oil tanker fleet capacity of 15 mil ton/yr • Strait of Hormuz - bunkering, economic supply of oil products, and availability of infrastructure and equipment,
  33. 33. Iran welcomes India USD 85 mil private investment for Chabahar port project, Aug 15 India-Iran Strategic Chabahar Port to be Operational by December 2016, Will Give Access to Afghanistan, Central Asia
  36. 36. China Sri Lanka Port Project – Xi visit – Sep 2014
  37. 37. Sri Lanka Colombo South Harbour (Hambantota) expansion/China submarine visit
  38. 38. Bangladesh “aborted” China backed USD 8 billion port in Sonadia island
  39. 39. Japan JICA (ADB?) funds Bangladesh Matarbari port
  40. 40. LNG tankers lie unused around Singapore as gas downturn turns to crisis, Feb 15
  41. 41. S.Korea to build LNG bunkering terminals, wants to dominate duel-fuel tanker building, Jul 15
  42. 42. Chinese independents ENN, Guanghui Energy get foothold in LNG trade as restrictions lifted, May 15
  43. 43. Pertamina to partner with Kalla Group for 4- mtpa LNG receiving terminal, Apr 15
  44. 44. Philippines' First Gen seeks partner for $1 bln LNG import terminal, Mar 15
  45. 45. China Deepsea Oil rigs in South China Seas
  46. 46. China builds 6 artificial islands in South China Seas and builds 3rd airstrip
  47. 47. China builds 6 artificial islands in South China Seas and builds 3rd airstrip
  48. 48. Saudi Arabian Crude Oil Production & Brent Price
  49. 49. China Oil production & consumption
  50. 50. China Peak Oil ? - Oil Production Trajectories of Daqing and Prudhoe Bay, ‘000 bpd
  51. 51. China Peak Oil ? - Slowing Changqing Output Suggests Tight Oil Insufficient to Offset Core Fields’ Decline
  52. 52. China Peak Oil ? - Offshore Oil Production Will Not Turn the Tide of Oil Production Declines
  53. 53. Key implications • The game, players and rules have changed. • Oil & Gas security from Lisbon to Shanghai requires new approaches or serious adaptation of the old ones • A potential security and economic crisis in the making – esp the downturn started from China & the South China seas dispute • Volatility not only in prices but also in social security • Develop win-win propositions for all in order to reduce geopolitical tensions • Tank storage investors still have many other new attractive destinations
  54. 54. Cosco China runs 3 mil TEU/yr Greek Piraeus Port
  55. 55. Cosco Pac & CMHI acquires 65% of Turkey Kumport for USD920 mil, Sep 15