Corporate presentation march 2011
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Corporate Presentation March 2011. Table of Contents. About China Gas. China Gas Overview. Principal Business Segments

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Corporate Presentation March 2011

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Corporate presentation march 2011

Corporate PresentationMarch 2011


Table of contents

Table of Contents


About china gas

About China Gas


China gas overview

China Gas Overview

  • Principal Business Segments

    • Natural Gas Services Operator: Engages in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas to residential, industrial and commercial users, and construction and operation of natural gas refilling stations

      • Business started in 2002 when China decided to construct the West-East Pipeline

      • Operates in 146 city concessions with 30-year monopolistic operating right each

      • Possesses a pipeline network of more than 52,746 km serving approximately 5.6 million household users and nearly 37,623 industrial and commercial users

    • LPG Supplier: The only vertically-integrated LPG operator in PRC

      • Entered into the LPG industry in September 2008

      • Owns 11 LPG receiving terminals, 275,000 m3 of LPG storage capacity, upstream to downstream distribution network in PRC

      • Covering wholesale and retail LPG supply in Guangdong, Guangxi, Fujian, Zhejiang, Jiangsu and Anhui provinces.


Strategic partnerships

Strategic Partnerships

Each of GAIL, Oman Oil, SK E&S and ADB has senior person on the board of China Gas, providing valuable insights and advice from the international and diversified perspectives

Strategic shareholders have partnered and helped China Gas’ growth through the years

Oman Fund

(Nov 2007)

Public

SINOPEC

(Dec 2004)

Oman Oil

(Jan 2006)

Management & Founders

(2002)

SK

(June 2008)

GAIL

(May 2005)

ADB

(Oct 2006)

12.28%

4.82%

4.82%

3.44%

9.74%

55.74%

5.45%

3.71%

CHINA GAS

As of 31 December 2010


Natural gas project development process

Natural GasProject Development Process

Bid & award

Construction & development

12-18 months

Operation

30 years

China Gas has a strong track record of developing city gas projects on time and on budget

  • About 15 projects under review

  • Investment criteria include:

    • Project IRR > 15%

    • Industrial demand

    • Natural gas accessibility

Revenue: Gas connection fees

Projects under development

2007: 20 projects

2008: 18 projects

2009: 47 projects

2010: 35 projects

1HFY11: 43 projects

Revenue: Sales of piped gas

Projects in operation

2007: 37 sites

2008: 50 sites

2009: 63 sites

2010: 99 sites

1HFY11: 103 sites


Natural gas current project locations

Natural GasCurrent Project Locations

Henan 8 city gas concessions from Zhongyu Gas

Hebei Cangzhou, Cangzhou Economic Development Zone, Nanpi, Qinghe, Leting, Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu, Wangdu, Nanbao, Bohai New Area, Hebei Pipeline, Tang County

Heilongjiang Harbin, Jiamusi, Shuangcheng, Mudanjiang, Jiagedaqi

Liaoning Dalian, Fushun, Jinzhou, Sujiatun(Shenyang), Jinzhou D. Zone, Liaoyang, Gaizhou, Zhuanghe, Linghai, Pulandian, Liaoyang Economic Zone, Jinzhou Longxiwan New Zone

Heilongjiang

Gansu Lingtai County

Jilin

Inner Mongolia Hohhot, Wushenqi, Wushenqi Pipeline, Changmeng Pipeline, Baotou, 4 counties, Etoke Banner, Etuokeqi, Alashan, Zuoqi Tenggeli Industrial Zone

Liaoning

Tianjin Tianjin Pipeline

Inner Mongolia

Gansu

Beijing

Xinjiang

Tianjin

Shandong Dezhou, Qingdao, 3 cities from Zhongyu Gas

Hebei

Ningxia Zhongwei

Ningxia

Shandong

Shanxi

Qinghai

Jiangsu Pizhou, Yangzhong, Nanjing (Jiang Bei, Pukou), Xuzhou (Jiawang), Xuzhou (Xinyi), Yangzhou

Shaanxi Baoji, Qishan Xian, Yulin

Henan

Jiangsu

Shaanxi

Tibet

Shanghai

Anhui

Hubei

Hubei Yichang, Xiaogan, Hanchuan, Yingcheng, Yunmeng, Suizhou, Tianmen, Guangshui, Dangyang, Xiaogan Pipeline, Dangyang Pipeline, Huanggang-Daye pipeline

Sichuan

Zhejiang

Chongqing

Zhejiang Hangzhou (Xiaoshan), Taizhou, Jinhua, Hangzhou Jiangdong Industrial Zone

Jiangxi

Hunan

Fujian

Guizhou

Yunnan

Fujian 29 city gas concessions

Taiwan

Guangdong

Guangxi

Chongqing Dianjiang E&P, Yubei District, Dingwang purification, Chongqing Pipeline

Anhui Wuhu, Huainan, Shouxian, Suzhou, Wuhuxian, Nanling, Huoshan, Fengtai, Wuwei, Xiuningxian

Hainan

Hunan Yiyang, Yuanjiang, Youxian

GuangdongMaoming, Conghua, Meizhou, Yunfu, Shanwei, Xinxingxian, Fengshunxian, Pingyuanxian

Guangxi Yuling, Qinzhou, Liuzhou, Fongchenggang, Laibin, Baise, Nanning City, Nanning Dongmeng Development Zone, Bobai

Jiangxi Nanchang (Wanliqu)


Natural gas business

Natural Gas Business


Natural gas business model

Natural GasBusiness Model

Natural gas fields

City gate

National or provincial

pipelines

Storage tanks(spherical or cylinder)

Assets owned by the Group:

Main pipelines

Branch pipelines

Pressure regulating boxes

Switches

Processing stations

* Customers’ pipelines which are not owned by the Group are within the customers’ premises and are not highlighted in this diagram

Industrial users*

Residentialhouseholds*

Car refueling station

Commercial users*


Natural gas revenue model and pricing

Natural GasRevenue Model and Pricing

2 main sources of revenue

Gas connection: one-off payment mainly from residential users, less so from industrial and commercial users

Sale of piped gas: recurring income at tariffs approved by the local governments

END-USER TARIFF COMPONENTS

Exploration

Wellhead price

Transportation

Transmission tariffs

Distribution

Distribution cost + margin

NDRC Approval

Local Price Bureau Approval

Natural gas business operates on a cost-plus pricing model


Natural gas supply growth

Natural Gas Supply Growth

  • Growth made possible by:

    • Additional gas supply from PetroChina as a result of the cooperation agreement

    • Commissioning of new gas fields

      • Xinjiang Province

      • Inner Mongolia

      • Sichuan Province

    • Commissioning of new national pipelines

      • Sichuan – East Pipeline

      • West – East Pipeline II

    • Import of piped gas from Central Asia, Russia and Myanmar

    • Completion of additional LNG terminals

China Natural Gas Supply Projection

Billion m3

Source: NDRC


Liquefied petroleum gas lpg business

Liquefied Petroleum Gas (LPG) Business


Lpg business

LPG Business

China Gas is the largest and only vertically integrated LPG supplier in the PRC covering retail and wholesale

Our LPG business covers:

Upstream: Direct supply from refineries of PetroChina and Sinopec; also import from the Middle East;

Midstream: 11 receiving terminals, 275,000 m3 LPG storage facilities, fleets of vessels and trucks, and distribution logistics in Guangdong, Guangxi, Fujian, Zhejiang, Anhui and Jiangsu;

Downstream: Direct retail of bottled LPG to households.

Heilongjiang

Jilin

Xinjiang

Liaoning

Inner Mongolia

Gansu

Beijing

Tianjin

Hebei

Ningxia

Shandong

Shanxi

Qinghai

Henan

Jiangsu

Shaanxi

Tibet

Shanghai

Anhui

Hubei

Sichuan

Zhejiang

Chongqing

Jiangxi

Hunan

Guizhou

Fujian

Yunnan

Taiwan

Guangdong

Guangxi

Hainan

LPG receiving terminals and storage facilities


Lpg business model

LPGBusiness Model

Assets owned by the Group

LPG vessels

LPG trucks

Trucks sending bottled LPG

Class 1 Station

Class 2 Station

Class 3 Station

Oil Refinery

Import/

Domestic Supply

Bottling Station

LPG Receiving Terminal

City gas companies

Industrial users

Domestic supply

Storage Facilities

Commercial users

Residential households


Value chain of lpg supply

Value Chain of LPG Supply

4-5%

Oil Refinery

Class 1

Station

LPG Wholesaler

Class 2 Station

Bottled LPG Maker

Class 3 Station

Bottled LPG

Retailers

Gross Margin (%)

5-6%

6-7%

10-12%

Source: Company data


Lpg supply and demand in china

LPG Supply and Demand in China

China LPG Demand by Sector

China LPG Supply and Demand

Source: Company data


Operational highlights 1h fy2011

Operational Highlights 1H FY2011


Piped gas sales volume as at 30 th sep 2010

Piped GasSales Volume (as at 30th Sep 2010)

Total sales volume (million m3)


Natural gas volume customer breakdown as at 30 th sep 2010

Natural Gas VolumeCustomer Breakdown (as at 30th Sep 2010)

Natural gas sales volume (million m3)

19


Natural gas customer data as at 30 th sep 2010

Natural GasCustomer Data (as at 30th Sep 2010)

20


Corporate presentation march 2011

Natural GasOther Operational Data (as at 30th Sep 2010)

Urban population covered and penetration rate

Natural gas daily consumption

(000 m3)

Urban Population Covered (m)

Penetration Rate


Corporate presentation march 2011

Natural GasOther Operational Data(as at 30th Sep 2010)

22


Lpg operational data as at 30 th sep 2010

LPG Operational Data(as at 30th Sep 2010)


Financial highlights 1h fy2011

Financial Highlights 1H FY2011


Financial summary income statement

Financial SummaryIncome Statement


Financial summary balance sheet debt position

Financial SummaryBalance Sheet & Debt Position

* of which HK$2,851,490,000 was Zhongyou Huadian LPG trade finance related facilities


Fy2011 12 guidance

FY2011-12 Guidance


Fy2011 2012 guidance

FY2011-2012 Guidance

  • Enhance organic growth of existing city gas and pipeline projects in terms of residential penetration, industrial connections and CNG station rollout

  • Continue upstream LPG integration with refineries Sinopec and CNPC and enhance imports through Oman Oil’s connections in the Middle East

  • Active rollout of LPG downstream retail distribution network through the newly established JV with Oman Oil


Disclaimer

Disclaimer

Statements in this presentation and handout that are not strictly historical are “forward-looking” statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, continued acceptance of the Company’s product and services in the marketplace, competitive factors, new products and technology changes, the Company’s dependence upon third party suppliers and other risks detailed from time to time in the presentation, handout and other related documents. China Gas is not responsible for the accuracy and completeness of the contents of such presentations and/or other documents. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.


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