Is there an opportunity for China to seize the bottom of us oil and gas assets?

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 Is there an opportunity for China to seize the bottom of us oil and gas assets?


One

In July, baffey made a huge purchase of the midstream energy business of dominion energy, a natural gas company, with a total transaction volume of US $9.7 billion (about RMB 68.5 billion), of which 4 billion was invested and the other 5.7 billion was carried out in the form of debt.

The natural gas pipeline of Dominic company in rasby, MD.

Buffett.

At the end of June, Chesapeake energy, an old US shale oil company, filed for bankruptcy. The giant, whose market value was once as high as $37.5 billion (about 202.1 billion yuan), fell to $200 million (about 1.4 billion yuan) before bankruptcy. Before Chesapeake, whiting petroleum and diamond offshore drilling went bankrupt this year. According to statistics, as of July 3, more than 20 companies in the U.S. energy industry with debts of more than 50 million US dollars (about 350 million yuan) filed bankruptcy applications.

The business logic of dominion energy transmission, Questar pipeline, Carolina gas transmission, and Iroquois gas transmission system are not complicated emuff09u3002

After Berkshire energy completes the acquisition, its business will account for 18% of all interstate gas transfers in the United States.

So, among the many projects that can be acquired, why does Mr. Buffett buy a gas pipeline company that is going to go bankrupt?

Two

What is favored by the God of stocks?

Before the 1980s, the United States and Canada strictly regulated the price of natural gas wells (the price at the time of exploitation), which restricted the enthusiasm of enterprises in production, and made the price of natural gas unable to effectively reflect the market changes. In the 1970s, the oil crisis broke out and the price of oil rose. However, the price of natural gas was still low, which led to a serious shortage of natural gas in the United States in the winter of 1976-1977. Schools were closed and thousands of factories were shut down.

In this case, pipeline transportation service came into being.

The U.S. natural gas market is diversified, with free competition in upstream, midstream, downstream and trading markets. There are more than 6300 upstream producers, including 21 major companies, about 160 midstream pipeline companies, 123 gas storage operators, more than 1300 distribution companies in downstream areas, 66.72 million residential users, 5.36 million commercial users, 190 000 industrial users and more than 1700 power generation users.

In principle, market supply and demand determine the price of natural gas.

In 2016, the US shale gas production was 20.6 billion cubic meters, and that in 2018 was 648.6 billion cubic meters, an increase of 32 times. The United States will become the worlds largest exporter of natural gas in the future, from 70% dependence on foreign energy to self-sufficiency in oil and gas. China will become one of the top export targets of the United States.

Pipeline services, like highway tolls, can continuously generate cash flow. For Buffett, this is a very good asset, and it is also a business model he is very familiar with - charging toll mode. His investment in American Express in the past has similar characteristics.

Moreover, the proportion of natural gas in the primary energy, there is still a lot of room for development in the future. In the global primary energy structure, with the characteristics of low-carbon and clean, the status of natural gas has been rising from 18% in 1980 to 24% in 2018, while oil has decreased from 46% to 34% and coal has stabilized at 27%.

According to the analysis of the 2019 world and China Energy Outlook report released by BP and CNPC economic and Technological Research Institute, the proportion of natural gas in primary energy may rise to 27.6% around 2050, surpassing 27% of oil, becoming the largest energy product.

There is no doubt that there is still a lot of room for natural gas in power generation, civil and industrial development in the future, which may be the second reason why Buffett is optimistic about natural gas.

Three

Chinas natural gas market has a long way to go

If Mr. Buffett is optimistic about the U.S. natural gas pipeline transportation, isnt there a greater opportunity for Chinas natural gas pipeline transportation?

Compared with the United States, Chinas natural gas market has a very large development space in terms of pipeline transportation length and pipeline transportation transaction.

In terms of natural gas consumption, Chinas natural gas still has a lot of room for improvement.

In the energy structure of the United States, natural gas accounted for 31% of primary energy in 2018. According to BP statistics, in the world energy consumption structure in 2013, coal accounted for 30%, oil accounted for 33%, and natural gas accounted for 24%. However, Chinas natural gas accounted for only 7% - 8% of primary energy. According to market forecast and policy direction, Chinas natural gas accounted for 10% of primary energy in 2020 and 15% in 2030. There is still a lot of room for growth.

In terms of the length of natural gas pipeline, Chinas natural gas pipeline mileage is about 1 / 5 of that of the United States.

At present, the total mileage of main oil and gas pipelines in China is 120000 km, including 19000 km of crude oil, 25000 km of refined oil and 76000 km of long-distance natural gas pipeline. According to the 13th five year plan of natural gas, by 2020, 40000 km of new natural gas trunk and supporting pipelines will be built, with a total mileage of 104000 km. The natural gas pipeline in the United States has exceeded 300000 miles (about 480000 kilometers), which is about 5-6 times the total mileage of Chinas natural gas trunk pipeline.

The inspectors from Yinchuan Management Office of PetroChina West to east gas pipeline company inspected the pipelines and pressure gauges in Zhongwei gas pressure station of West to east gas pipeline company.

In 2018, there are 44 long-distance natural gas pipelines under construction and 14 planned trunk lines in China. The per capita gas consumption and total pipeline length are far lower than those of developed countries. The density of natural gas pipeline is only 1 / 6 of that of the United States, 1 / 10 of France and 1 / 15 of Germany. The per capita gas consumption is 170 cubic meters, which is far lower than the world average of 472 cubic meters.

In addition, Chinas urbanization will also boost the growth of natural gas demand and pipeline transportation mileage.

(function(){( window.slotbydup=window .slotbydup||[]).push({id:u5811557,container:ssp_ 5811557, async:true }According to the data released by the National Bureau of statistics of China, Chinas urbanization rate is 59.6% in 2018, which is still at least 10 years away from the urbanization level of Japan (91.6%) and the United States (82.3%), which brings huge space for Chinas sustainable development and the demand for energy will continue to grow. In fact, Chinas per capita energy consumption is still far lower than that of developed countries, which shows that Chinas urbanization level is indeed lower than that of developed countries. From this point of view, there is still a large space for Chinas natural gas transmission demand. With the establishment of the national pipeline network company in December 2019, the separation of oil and gas pipeline transportation and transportation will be the core and focus of oil and gas reform in recent years. China will inevitably open the pipeline to the third party fairly to take the road of natural gas marketization in the past of the United States, and promote the development of pipeline transportation and natural gas marketization by increasing supply. Source: Shangguan news editor: Zhang Lei_ NB16011

There is still a certain gap between Chinas current urbanization rate and that of developed countries. According to the data released by the National Bureau of statistics, Chinas urbanization rate was 59.6% in 2018, and there is still a gap of at least 10 years between the urbanization level of Japan (91.6%) and the United States (82.3%), which brings huge space for Chinas sustainable development and the demand for energy will continue to grow.

In fact, Chinas per capita energy consumption is still far lower than that of developed countries, which shows that Chinas urbanization level is indeed lower than that of developed countries. From this point of view, there is still a large space for Chinas natural gas transmission demand.

With the establishment of the national pipeline network company in December 2019, the separation of oil and gas pipeline transportation and transportation will be the core and focus of oil and gas reform in recent years. China will inevitably open the pipeline to the third party fairly to take the road of natural gas marketization in the past of the United States, and promote the development of pipeline transportation and natural gas marketization by increasing supply.