The Chinese Oil Sector

THE CHINESE
OIL SECTOR
INVESTMENT OPPORTUNITIES IN OIL PORTS, STORAGE
AND OTHER DISTRIBUTION FACILITIES

contact@port-investor.com
www.port-investor.com

The Chinese Port Sector at a glance
 Massive container, dry bulk, oil and CHINA IN THE WORLD TODAY
liquids markets - representing an (a few key numbers on the Chinese economy and its Port Sector)
immense share of world throughput
1.3 >400
 New segments such as bio fuel and Billion people >30% Mill. tons
others in rapid development Of world container of crude oil demand +
throughput target to further
increase oil supply
 Limited competition - many ports with reserves
one controlling port group 10%
Consistent growth
 Strong interest with local governments last 30 years – may
overtake the US by 11
to attract “multinationals” 2030 Of the worlds
20 biggest ports
 Negotiated deals are the norm (vs open and 50+ large
tender) 10 >60% “secondary” ports
 Less competition for developments Trillion USD Of world iron
PPP adjusted GDP ore demand
 More deal flexibility

Tapping into this potential requires a significantly different approach than most take - it requires a new model that
engages local stakeholders in a positive way. For investors just bringing money the window of opportunity may well
have passed in China.


The Chinese Oil Market – an overview
2005-2015 China refinery capacity
2005 2009 2010 2015 E
Total Capacity (1,000 tonnes) 324,490 478,000 504,800 696,800
Sinopec 163,500 50.4% 216,000 45.2% 237,800 47.1% 314,300 45.1%
Petro China 119,390 36.8% 149,000 31.2% 154,000 30.5% 214,000 30.7%
Cnooc 500 0.2% 32,100 6.7% 33,500 6.6% 56,000 8.0%
Sinochem and others 41,100 12.7% 80,900 16.9% 79,500 15.7% 112,500 16.1%

China crudeoil China Oil Exp & Imp
consumption and production 300,000
250,000
500,000 60
200,000

,000 TONS
400,000 50
150,000
40
300,000 100,000
30
200,000 50,000
20
-
100,000 10
2005 2006 2007 2008 2009 2010
- 0
2005 2006 2007 2008 2009 2010 Import Export

Consumption Produced in China
Dependence for Import %


The Chinese Oil Market – long term outlook
 China expected to become the
biggest crude oil importer by 2020

 By 2035 China import crude oil
volume may have tripled

 China will be driving global oil
demand (not least through growing
transportation need)

 Growing consumption and
dependence on import will drive
increasing demand for storage and
oil logistics and distribution facilities

 Continued support and intention to
grow the domestic oil reserves will
further drive this trend
Notes: Source for above charts is the International Energy Agency


China’s main Oil Ports and SPR’s
2010 Port Oil & Liquid Capacity for SPR
Port SPR Locations Phase Operator
Throughput (,000 tons) (mill CBM)
Ningbo 80,542
Zhoushan (Zhejiang) I 5 Sinochem
Qingdao 65,080
Zhenhai (Zhejiang) I 5.2 Sinopec
Tianjing 61,510
Huangdao (Shandong) I 3.2 Sinopec
Dalian 61,121 Dalian (Liaoning) I 3 Petro China
Zhoushan 45,034 Zhoushan (Zhejiang) II 2.5 Sinochem
Huizhou 39,642 Tianjin II 5 Sinopec
Nanjing 33,400 Shanshan (Xinjiang) II 8 Petro China
Shanghai 25,295 Dushanzi (Xinjiang II 5.4 Petro China
Zhanjiang 23,890 Huizhou (Guangdong) II 5 Cnooc
Yingkou 21,192 Lanzhou (Guansu) II 3 Petro China
Quanzhou 17,130 Jinzhou (Liaoning) II 3 Petro China

Yangpu 15,600 Jintan (Jiangsu) II 3 Petro China
Total 51.3
Shenzhen 14,469
Laizhou(Shandong) 14,000  4 Strategic Petro Reserve zones are operational
Maoming 13,610 (starting in 2008 for Phase 1)
Beibu Gulf 12,220
 8 SPR zones in Phase 2 are now under construction
Zhuhai 12,100
 Locations for Phase 3 are being explored and
Jinzhou 10,800
planned to add another 43 million cbm of storage
Nantong 9,500
capacity
Qinhuandao 8,720


China Consortium and how to participate
We have cooperation with global as well as local Chinese
operators, funds, developers, port groups and many others.

As development and collaboration opportunities emerge we
involve clients that we have formalized cooperation with and (if
relevant) parties that may benefit our existing client network
for specific developments or acquisitions.

China Consortium is already in motion in several locations. If
you would like to be part of it please contact us at
contact@port-investor.com and we would be glad to discuss
your needs and relevant scope for the Chinese infrastructure
market. For more information about developing markets with
Port Investor see appendix or go to:

www.port-investor.com/marketdevelopment

APPENDIX
Chinese oil ports – a few of our focus areas


Some of our focus areas in 2012
REGIONS

 North: Caofeidian
 East: Zhoushan
 South: Jiangmen/Taishan/Zhanjiang
 Middle: Wuhan
 West: Yunnan/Sichuan

TARGETS

 Private acquisitions
 Local greenfield opportunities
 Port group partnerships
 Energy company partnerships
 Consortiums for development zones
with oil relevance

Focus area example: Zhoushan
The map shows Lvhuashan Zhoushan prefecture:
part of the current Existing
oil storage  Thousands of islands, part
facilities and the of Zhejiang province, close
Developments
potential future Yangshan to Ningbo, Shanghai and
developments in Planned
mouth of Yangtze: major
Zhoushan. location for oil port and
Shengshan transshipment.
 SPR ph1 and ph2.
 In 2011 central government
Taipingyang (MaAo) Shuangzishan named it “Zhoushan New
Area” with strong
Tianlu (Dinghai) Guangxia (Huangzeshan) government support.
 Existing and new facilities in
Sinopec (Cezi) Dachangtu development range from
0.5 to 2.5 million cbm.
Sinochem ph2 (Cezi) Gaoting

MaAo East
Port throughput:
Guanghui (Waidiao)
(in million tonnes)
Sinochem (Aoshan)
Haiyue (Damao) Year Total Oil & Liquid
SPR ph1 (Aoshan) 2011 260.5 52.0
Damao 2010 220.8 45.0
Wanxiang (Aoshan) 2009 193.0 42.2

Ningbo Jinrun (Liuheng)


APPENDIX
Developing port markets and investments


Why?
Thousands of ports, assets and projects…
…hundreds of different investment models…
…an infinite amount of opportunities!

The challenge – how to tap the potential?

Too little time – too few resources…
Too big – too small…
Too expensive – too risky…
Too early – too late…

The solution – risk free market engagement and effective deal creation!

Deal
50,000
targets 1-5
5,000
markets

+
Develop
500
investment 10-20
models
Engage
50-100
Market intelligence
and scanning
Matching propositions 1,000-5,000


What?
Bulk Financial investor
Singapore Dampier Corpus Christi London Southampton
Shanghai Hamburg Gladstone Bergen Wilhelmshaven
Container Rotterdam New York Primorsk Taichung Calais
$10+ million Operator Tianjin Nantong Bremen Bombay Baltimore
Ningbo Vancouver Long Beach Barcelona Forth Ports
Guangzhou Yantai Corpus Christ Sao Sebastiao Bilbao
Greenfield Brownfield Qingdao
Hong Kong
Nanjing
Kitakyushu
Algeciras
Pohang
Lake Charles
Trieste
Pittsburgh
Yanbu
Qinhuangdao Tangshan New Orleans Texas City Karachi
Dalian Itaqui Grimsby Baton Rouge New Mangalore
Developer Majority Busan lianyungang Beaumont Saldanha Bay Tampa
Nagoya Tubarao Huntington Paradip Milford Haven
Shenzhen Marseilles Constantza Jeddah Odessa

Acquisition Oil & Liquid South Louisiana
Houston
Newcastle
Kobe
Mobile
Hampton Roads
Tees
Manila
Leghorn
Paranagua
Antwerp Amsterdam Ports St. Petersburg Alexandria Paulsboro
Ulsan Osaka Valencia Taranto Tarragona

Logistic Zone $100+ million Chiba
Port Hedland
Tanjung Pelepas
Sepetiba
Plaquemines
Dunkirk
Gothenburg
Tampa
Valdez
Texas City
Port Kelang Richards Bay Madras Jubail Liverpool
Rizhao Hay Point Jawaharlal Nehru Tanjung Priok Savannah
Yingkou Novorossisk Los Angeles Zeebrugge Brisbane
Seed investor Free Zone Kaohsiung Tokyo Genoa Mormugao Lubeck
Inchon Santos Calcutta Durban Pascagoula
Yokohama Le Havre Izmit Duluth-Superior Angra dos Reis

Minority $1+ billion

Whether it is acquisitions, green fields, majority, minority, mature assets, high upside propositions, oil, container or bulk…
Whether in China, Middle East, Europe, Latin America or any other nation or region…
The opportunities exist or can be created!

Who?
Pension funds, terminal operators, free zone developers, insurance funds, oil storage
operators, shipping lines, sovereign wealth funds, bulk operators, logistics zone
operators, private equity funds, construction companies, industrials, general
investment funds, port groups…

…that wish to invest
…that wish to operate
…that wish to develop
…that wish to partner
…that wish to collaborate

The great thing about this?

There are many more potential partners to cooperate and find solutions with
than there are competitors!


How?
Step 4
Deal Closing the deal
1-5
Step 3
Develop Deal development
10-20

Step 2 Engage
Engage the most relevant
50-100

Step 1 Market intelligence
Focus among the many and scanning
1,000-5,000

Step 0 Purpose Target Proposition
Create the foundation


Now!

Contact us on contact@port-investor.com...

…and let us help you start developing the propositions you want!

For more information on our market development process and the
opportunities in the market place please refer to the appendices.


APPENDIX
Choosing your scope


How can we help you… All constituents have different needs as concerns
the target locations and the type of investments.
These are just a small handful of examples.
…relevant scope (1)

Bulk Financial investor Singapore Dampier Corpus Christi London Southampton
Shanghai Hamburg Gladstone Bergen Wilhelmshaven
Container Rotterdam New York Primorsk Taichung Calais
$10+ million Operator Tianjin
Ningbo
Nantong
Vancouver
Bremen
Long Beach
Bombay
Barcelona
Baltimore
Forth Ports
Guangzhou Yantai Corpus Christ Sao Sebastiao Bilbao
Qingdao Nanjing Algeciras Lake Charles Pittsburgh
Greenfield Brownfield Hong Kong Kitakyushu Pohang Trieste Yanbu
Qinhuangdao Tangshan New Orleans Texas City Karachi
Dalian Itaqui Grimsby Baton Rouge New Mangalore

Developer Majority Busan
Nagoya
lianyungang
Tubarao
Beaumont
Huntington
Saldanha Bay
Paradip
Tampa
Milford Haven
Shenzhen Marseilles Constantza Jeddah Odessa
South Louisiana Newcastle Mobile Tees Leghorn
Acquisition Oil & Liquid Houston Kobe Hampton Roads Manila Paranagua
Antwerp Amsterdam Ports St. Petersburg Alexandria Paulsboro
Ulsan Osaka Valencia Taranto Tarragona
Chiba Tanjung Pelepas Plaquemines Gothenburg Valdez
Logistic Zone $100+ million Port Hedland Sepetiba Dunkirk Tampa Texas City
Port Kelang Richards Bay Madras Jubail Liverpool
Rizhao Hay Point Jawaharlal Nehru Tanjung Priok Savannah
Yingkou Novorossisk Los Angeles Zeebrugge Brisbane

Seed investor Free Zone Kaohsiung
Inchon
Tokyo
Santos
Genoa
Calcutta
Mormugao
Durban
Lubeck
Pascagoula
Yokohama Le Havre Izmit Duluth-Superior Angra dos Reis

Minority $1+ billion


How can we help you… Each constituent have different needs as
concerns the deal pyramid. Some look for
solutions all the way from market intelligence to
…relevant scope (2) closing actual deals, others only up to and
including engagement of the relevant authorities
and potential partners.

Step 4
1-5
Lead Step 3
development Deal development
10-20

Step 2 Focused
Engage the most relevant market engagement
50-100

Step 1 Market intelligence
Focus among the many and scanning
1,000-5,000


APPENDIX
Just a few of the many opportunities


Market development…
…port expansion and new ports potential
Port zones are natural growth
engines for the economy. The Port Property Dry Port Oil Storage
potential to develop and
expand to generate economic
growth and trade for most Cruise
Bio
ports far exceeds their current
Fuel
footprint.
Logistic
This includes the development Bulk Zone
of trade hubs, free zones,
industry zones and other Trade Energy
concepts. Hub Hub
For investors this gives
potential to invest in some of
the most valuable industry
Intermodal Hub Free Zone In-Port Industries
property and port
infrastructure.

…acquisition potential
Among the big acquisition
opportunities are the
portfolios of many shipping …just a few examples…
lines that are expected to face Target Transaction value Acquiring party
a difficult period and port Portek portfolio $146mn Mitsui
owners - some of which are Tin Can Container Terminal (Zim lines $154mn China Merchants
47.5% share)
looking to do a.o. PPP type Malta Freeport (CMA CGM's 50% share) $285mn Yildirim Group
deals that essentially are asset DPW Australia portfolio (75% share) $1.5bn Citi Infrastructure Investors
Chennai International Terminals (Sical's Not reported PSA International
sales. 27% sare)
ACS Dragados Spanish port portfolio €720mn JP Morgan led consortium
Many single asset owners also Yantian International Container $520mn Cosco Pacific
sit with acquisition Terminals (APM Terminals' 9.7% share)
opportunities, some with full Poti Sea Port (80% share) Not reported APM Terminals
Santos - BTP (50% from MSC) Not reported APM Terminals
ownership of a terminal or a
port and some with majority
or minority holdings in specific
assets.


…collaboration potential (1)
Greenfield MATCHING
$1bn Over the course of a port infrastructure project • Private Equity
the nature of the investment changes from stage • Construction
Development Company
Port Group to stage. Investors (as well as operators and
developers) all have different preferences, some
Oil are more suitable for green-field whereas others • Investment
Operator look for mature facilities. Likewise each Fund
Growth • Operator
constituent brings its own set of strengths and
Container skills to the table that amongst others can allow
Operator
the undertaking of larger projects.
• Pension Fund
Bulk Maturity
Operator SYNGERGIZING (1 + 1 = 3)
Ultimately this is all about finding synergies
Investment between parties with different skills and needs to
Fund
accelerate development that may not otherwise
have been possible or less attractive.

The port industry has TERMINAL OPERATORS
thousands of different APM Terminals
operators and port owners that Oiltanking
are ready to collaborate for ICTSI
different types of projects at Vopak
different stages of the project
in different geographies. PORT OWNERS
Port of Rotterdam
Likewise on the side of the Shanghai International Port Group
parties actually owning cargo Abu Dhabi Terminal Company
there are many that either Santos Port Group
have a need to get better
market access on the sea side CARGO OWNERS
or have existing facilities that Shipping lines
they wish to outsource. Mining and mineral companies
Energy companies
Industrial Zones

The global investment fund INVESTMENT FUNDS AND PRIVATE EQUITY
sector manages more than Macquarie Infrastructure Group
$100 trillion. Many want to “get Brookfield Infrastructure Partners
real” (assets) and “go direct” JP Morgan Infrastructure Fund
(ownership) - they want real Citi Capital Advisors
assets with real purpose.
Owners or developers of port SOVEREIGN FUNDS
assets are in an ideal position to Abu Dhabi Investment Authority
tap into that. China Investment Corporation
Government of Singapore Investment Corporation
Many of the major funds prefer Malaysia Mining Corporation
getting in after the development
and optimization of a given port PENSION AND INSURANCE FUNDS
asset and want substantial deal Ping An (2nd biggest Chinese insurance fund)
size - often $100+ million. Ontario Teachers Pension Fund
ATP (biggest Danish fund)
APG (biggest Dutch fund, 3rd biggest globally)

IMMEDIATE COVERAGE FOR INVESTORS
For those with an interest to
The PI Consortium
enter, expand or invest in a specific
A new model for investors, developers and operators
region (e.g. China) and covering all the
key markets within months. Shipping lines Asia
Industrials Latin America
REAL ENGAGEMENT Fabrication Middle East
Our on the ground network directly
engages the local decision makers CARGO OWNERS PORT PARTNERS

COMPLEMENTARY
A group of leading firms with
complementary skills and objectives CONSORTIUM
enabling a strong proposition towards
ports.
DEVELOPERS INVESTORS OPERATORS
SYNERGISTIC AND NO RISK
No heavy regional setup or local office Free Zone Pension Fund Container
before you start running Marine Infra. Private Equity Oil & Liquid
Construction Sovereign Fund Dry Bulk


APPENDIX
The deal pyramid step by step


The PI Deal Pyramid… Step 4
…an overview $1bn

Develop
Step 3
Deal development
10-20

Step 2 Engage
Engage the most relevant
50-100

Step 1 Focus
Market intelligence and
scanning 1,000-5,000

Step 0 Purpose Target Proposition
Create the foundation


Step 0…
…defining purpose
What is the purpose?
Why are you looking for
an
acquisition, developmen
ts or partnerships?

Purpose


Step 0…
…identifying the target
What specifically is
relevant for you to
target, who to partner
with or what to
develop?

Purpose Target


Step 0…
…creating the proposition
With the target in mind
what is your proposition
to them? Why should
someone welcome your
investment, collaborate
or partner with you?

Purpose Target Proposition


Step 1…
…focus Deal

This is about getting
your market intelligence Develop
and scanning in place. It
is about getting the
right targets in sight.
Expose and Engage
Without it you are
going to be wasting
valuable time and
Focus
resources while others
cut deals. 1,000-5,000



Step 2…
Deal
…engagement
This is about creating Develop
true engagement – it is
not about desk research
it is about on the
ground direct contact Engage
with the real decision 50-100
makers and getting
your proposition out Focus
there in the right form.
1,000-5,000



Step 3…
Deal
…development
This is about fast- Develop
tracking and developing
real leads, creating 10-20
substantial
opportunities and Engage
creating real leverage 50-100
to close the deal.
Focus

1,000-5,000



Step 4…
Deal
…deal $1bn

Goal! Now use all the great Develop
efforts you did in step 0 to 3
to make many more! 10-20

Engage

50-100

Focus

1,000-5,000



APPENDIX
About Port Investor


InduStreams was founded with a mission to create a more transparent, connected and
informed infrastructure market place.
We subsequently launched Port-Investor.com as a specific sector pilot with focus on port
investing and the global port industry.

Current state of affairs
 200+ port groups and 1,000+ executives and decision makers in the network and increasing
 China Port Investor and other regions are being launched
 Specific concepts in development with select investors and port groups

The Vision
 Connecting all substantial port markets (5,000+ globally) with investors (1,000+ globally)
 Creating a transparent and informed market place driven by industry leaders and experts
 Unleashing the potential inherent in this sector by creating thousands of new investment
opportunities (we expect investment potential to exceed $1 trillion)

Want to know more or simply engage…
…contact us on:

The Chinese Oil Sector

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