Recently,weledafieldtriptoMainlandChinavisitingindustryexpertsandparticipantsfocusingonChina’snaturalgasdevelopment.Ingeneral,ourtripfindingssupportourUNDERPERFORMcallonPetroChina.FurtherdownsidetoPetroChina’sgassegmentlikely.WegottheimpressionthatdownstreamdemandwashurtsubstantiallyafterthepricehikeinJuly2013,andthestrongresistancecouldpreventtheNDRCfromraisingpriceagainin2014.Ifso,PetroChina’sincrementalearningsincrease(c.Rmb20bn)fromgaspricehikewillfacesignificantdownsiderisk.
OilfieldserviceprovidersfacinglowerASPandintensifyingcompetition.OurvisittoatightgasfieldofaleadingChineseoilmajorandanunlistedprivateoilfieldserviceprovidersuggestedthatASPforfrackingtools/serviceshasandwillcontinuetodeclineduetorisingcompetitionandlowercapexfromcustomers.
Coal-to-chemicalprojects,evenafterNDRC’spreliminaryapprovalofaseriesprojects,stillfacedifficulties,i.e.,financialconstraintsanddeferredtechnologyopinionsamongexperts.