1. Thomas Ng
Chairman, The Global Ports
Forum
Game-Changers in Oil & Gas:
Implications for Asia Tank Storage

2. I Recent Oil & Gas Trends
II AIIB, RMB Internationalisation, One Belt-One Road Strategy, etc
III Implications

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. 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. Russia to China

6. Russia pivot to Asia

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. A showdown between Moscow
and Beijing over Central Asia?

9. China-Europe “Silk Railway” and
“Maritime Route”

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
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
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. Authorized Capital in AIIB

14. AIIB Share Allocations

15. Signing Ceremony of AA of AIIB, Jun 15

16. Infrastructure Lending in Asia

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
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. RMB Internationalisation:
Developments
19

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. 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. 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
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
RMB Internationalization: Prospects
Macro level: “One Belt and One Road” strategy

25. A NEW SILK ROAD
REGIONAL COOPERATION VIA NEW OVERLAND AND
MARITIME LINKAGES

26. China opens new USD 2.5 bil oil & gas
pipeline through Myanmar, Feb 15

27. Obama opens new chapter in relations btw
US & Myanmar, Nov 13

28. China-Myanmar border conflict – Kokang
shells fall. China sent troops to border, May 15

29. China’s consortium study on new USD 28
bil Thailand Kra Canal, May 15

30. China consortium study on new USD 28 bil
Thailand Kra Canal, May 15

31. Kra Canal ??– Singapore’s maritime trade
dominance along Straits of Malacca
challenged ?

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. 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

34. CHINA PAKISTAN ECONOMIC
CORRIDOR – USD 46 bil, Apr 15

35. CHINA PAKISTAN ECONOMIC CORRIDOR

36. China Sri Lanka Port Project – Xi
visit – Sep 2014

37. Sri Lanka Colombo South Harbour
(Hambantota) expansion/China submarine
visit

38. Bangladesh “aborted” China backed
USD 8 billion port in Sonadia island

39. Japan JICA (ADB?) funds Bangladesh
Matarbari port

40. LNG tankers lie unused around Singapore as
gas downturn turns to crisis, Feb 15

41. S.Korea to build LNG bunkering terminals, wants
to dominate duel-fuel tanker building, Jul 15

42. Chinese independents ENN, Guanghui Energy get
foothold in LNG trade as restrictions lifted, May 15

43. Pertamina to partner with Kalla Group for 4-
mtpa LNG receiving terminal, Apr 15

44. Philippines' First Gen seeks partner for $1 bln
LNG import terminal, Mar 15

45. China Deepsea Oil rigs in South China Seas

46. China builds 6 artificial islands in South
China Seas and builds 3rd airstrip

47. China builds 6 artificial islands in South
China Seas and builds 3rd airstrip

48. Saudi Arabian Crude Oil Production &
Brent Price

49. China Oil production & consumption

50. China Peak Oil ? - Oil Production Trajectories of
Daqing and Prudhoe Bay, ‘000 bpd

51. China Peak Oil ? - Slowing Changqing Output
Suggests Tight Oil Insufficient to Offset Core Fields’
Decline

52. China Peak Oil ? - Offshore Oil Production Will
Not Turn the Tide of Oil Production Declines

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

55. Cosco China runs 3 mil TEU/yr
Greek Piraeus Port

56. Cosco Pac & CMHI acquires 65% of Turkey
Kumport for USD920 mil, Sep 15