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THE CHINESE OIL SECTOR
INVESTMENT OPPORTUNITIES IN OIL PORTS, STORAGE AND OTHER DISTRIBUTION FACILITIES
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Massive container, dry bulk, oil and liquids markets - representing an immense share of world throughput
New segments such as bio fuel and others in rapid development
Limited competition - many ports with one controlling port group
Strong interest with local governments to attract “multinationals”
Negotiated deals are the norm (vs open tender) Less competition for developments More deal flexibility
11 Of the worlds
20 biggest portsand 50+ large
“secondary” ports
>30% Of world container
throughput
>60% Of world ironore demand
CHINA IN THE WORLD TODAY(a few key numbers on the Chinese economy and its Port Sector)
1.3Billion people
10Trillion USD
PPP adjusted GDP
>400 Mill. tons
of crude oil demand + target to further
increase oil supply reserves
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.
10%Consistent growth last 30 years – may overtake the US by
2030
The Chinese Port Sector at a glance
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0
10
20
30
40
50
60
-
100,000
200,000
300,000
400,000
500,000
2005 2006 2007 2008 2009 2010
China crudeoil consumption and production
Consumption Produced in China
Dependence for Import %
-
50,000
100,000
150,000
200,000
250,000
300,000
2005 2006 2007 2008 2009 2010,0
00 T
ON
S
China Oil Exp & Imp
Import Export
The Chinese Oil Market – an overview2005-2015 China refinery capacity
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%
2005 2009 2010 2015 E
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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
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China’s main Oil Ports and SPR’s
SPR Locations Phase Capacity for SPR (mill CBM) Operator
Zhoushan (Zhejiang) I 5 Sinochem
Zhenhai (Zhejiang) I 5.2 Sinopec
Huangdao (Shandong) I 3.2 Sinopec
Dalian (Liaoning) I 3 Petro China
Zhoushan (Zhejiang) II 2.5 Sinochem
Tianjin II 5 Sinopec
Shanshan (Xinjiang) II 8 Petro China
Dushanzi (Xinjiang II 5.4 Petro China
Huizhou (Guangdong) II 5 Cnooc
Lanzhou (Guansu) II 3 Petro China
Jinzhou (Liaoning) II 3 Petro China
Jintan (Jiangsu) II 3 Petro China
Total 51.3
Port 2010 Port Oil & Liquid Throughput (,000 tons)
Ningbo 80,542
Qingdao 65,080
Tianjing 61,510
Dalian 61,121
Zhoushan 45,034
Huizhou 39,642
Nanjing 33,400
Shanghai 25,295
Zhanjiang 23,890
Yingkou 21,192
Quanzhou 17,130
Yangpu 15,600
Shenzhen 14,469
Laizhou(Shandong) 14,000
Maoming 13,610
Beibu Gulf 12,220
Zhuhai 12,100
Jinzhou 10,800
Nantong 9,500
Qinhuandao 8,720
4 Strategic Petro Reserve zones are operational (starting in 2008 for Phase 1)
8 SPR zones in Phase 2 are now under construction Locations for Phase 3 are being explored and
planned to add another 43 million cbm of storage capacity
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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 [email protected] 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
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APPENDIXChinese oil ports – a few of our focus areas
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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
Some of our focus areas in 2012
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Focus area example: Zhoushan
Sinochem (Aoshan)
SPR ph1 (Aoshan)
Wanxiang (Aoshan)
Sinochem ph2 (Cezi)
Guanghui (Waidiao)
Guangxia (Huangzeshan)
Shuangzishan
Haiyue (Damao)
Tianlu (Dinghai)
Jinrun (Liuheng)
Taipingyang (MaAo)
Sinopec (Cezi)
Lvhuashan
Dachangtu
Gaoting
MaAo East
Shengshan
Damao
Existing
Developments
Planned
Yangshan
Ningbo
The map shows part of the current oil storage facilities and the potential future developments in Zhoushan.
Zhoushan prefecture:
Thousands of islands, part of Zhejiang province, close to Ningbo, Shanghai and mouth of Yangtze: major location for oil port and transshipment.
SPR ph1 and ph2. In 2011 central government
named it “Zhoushan New Area” with strong government support.
Existing and new facilities in development range from 0.5 to 2.5 million cbm.
Port throughput: (in million tonnes)
Year Total Oil & Liquid2011 260.5 52.02010 220.8 45.02009 193.0 42.2
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APPENDIXDeveloping port markets and investments
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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
Develop
Engage
Market intelligence
and scanning
1-5
10-20
50-100
1,000-5,000Matching propositions
500 investment models
5,000 markets
50,000 targets
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What?
Greenfield Brownfield
Acquisition
Container
Bulk
Oil & Liquid
Logistic Zone
Free Zone
Majority
Minority
Financial investor
Developer
Operator$10+ million
$100+ million
$1+ billion
Seed investor
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!
Singapore Dampier Corpus Christi London SouthamptonShanghai Hamburg Gladstone Bergen WilhelmshavenRotterdam New York Primorsk Taichung CalaisTianjin Nantong Bremen Bombay BaltimoreNingbo Vancouver Long Beach Barcelona Forth PortsGuangzhou Yantai Corpus Christ Sao Sebastiao BilbaoQingdao Nanjing Algeciras Lake Charles PittsburghHong Kong Kitakyushu Pohang Trieste YanbuQinhuangdao Tangshan New Orleans Texas City KarachiDalian Itaqui Grimsby Baton Rouge New MangaloreBusan lianyungang Beaumont Saldanha Bay TampaNagoya Tubarao Huntington Paradip Milford HavenShenzhen Marseilles Constantza Jeddah OdessaSouth Louisiana Newcastle Mobile Tees LeghornHouston Kobe Hampton Roads Manila ParanaguaAntwerp Amsterdam Ports St. Petersburg Alexandria PaulsboroUlsan Osaka Valencia Taranto TarragonaChiba Tanjung Pelepas Plaquemines Gothenburg ValdezPort Hedland Sepetiba Dunkirk Tampa Texas CityPort Kelang Richards Bay Madras Jubail LiverpoolRizhao Hay Point Jawaharlal Nehru Tanjung Priok SavannahYingkou Novorossisk Los Angeles Zeebrugge BrisbaneKaohsiung Tokyo Genoa Mormugao LubeckInchon Santos Calcutta Durban PascagoulaYokohama Le Havre Izmit Duluth-Superior Angra dos Reis
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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!
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How?
Deal
Develop
Engage
Market intelligence
and scanning
1-5
10-20
50-100
1,000-5,000
Purpose Target PropositionStep 0Create the foundation
Step 1Focus among the many
Step 2Engage the most relevant
Step 3Deal development
Step 4Closing the deal
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Now!
Contact us on [email protected]...
…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.
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APPENDIXChoosing your scope
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All constituents have different needs as concerns the target locations and the type of investments. These are just a small handful of examples.
Greenfield Brownfield
Acquisition
Container
Bulk
Oil & Liquid
Logistic Zone
Free Zone
Majority
Minority
Financial investor
Developer
Operator$10+ million
$100+ million
$1+ billion
Seed investor
How can we help you……relevant scope (1)
Singapore Dampier Corpus Christi London SouthamptonShanghai Hamburg Gladstone Bergen WilhelmshavenRotterdam New York Primorsk Taichung CalaisTianjin Nantong Bremen Bombay BaltimoreNingbo Vancouver Long Beach Barcelona Forth PortsGuangzhou Yantai Corpus Christ Sao Sebastiao BilbaoQingdao Nanjing Algeciras Lake Charles PittsburghHong Kong Kitakyushu Pohang Trieste YanbuQinhuangdao Tangshan New Orleans Texas City KarachiDalian Itaqui Grimsby Baton Rouge New MangaloreBusan lianyungang Beaumont Saldanha Bay TampaNagoya Tubarao Huntington Paradip Milford HavenShenzhen Marseilles Constantza Jeddah OdessaSouth Louisiana Newcastle Mobile Tees LeghornHouston Kobe Hampton Roads Manila ParanaguaAntwerp Amsterdam Ports St. Petersburg Alexandria PaulsboroUlsan Osaka Valencia Taranto TarragonaChiba Tanjung Pelepas Plaquemines Gothenburg ValdezPort Hedland Sepetiba Dunkirk Tampa Texas CityPort Kelang Richards Bay Madras Jubail LiverpoolRizhao Hay Point Jawaharlal Nehru Tanjung Priok SavannahYingkou Novorossisk Los Angeles Zeebrugge BrisbaneKaohsiung Tokyo Genoa Mormugao LubeckInchon Santos Calcutta Durban PascagoulaYokohama Le Havre Izmit Duluth-Superior Angra dos Reis
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Deal
Lead development
Focused market engagement
Market intelligenceand scanning
1-5
10-20
50-100
1,000-5,000
Step 1Focus among the many
Step 2Engage the most relevant
Step 3Deal development
Step 4Closing the deal
How can we help you……relevant scope (2)
Each constituent have different needs as concerns the deal pyramid. Some look for solutions all the way from market intelligence to closing actual deals, others only up to and including engagement of the relevant authorities and potential partners.
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APPENDIXJust a few of the many opportunities
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Market development……port expansion and new ports potential
Bio Fuel
Cruise
Dry Port Oil Storage
In-Port Industries
BulkLogistic Zone
Free Zone
Port Property
Intermodal Hub
Energy Hub
Trade Hub
Port zones are natural growth engines for the economy. The potential to develop and expand to generate economic growth and trade for most ports far exceeds their current footprint.
This includes the development of trade hubs, free zones, industry zones and other concepts.
For investors this gives potential to invest in some of the most valuable industry property and port infrastructure.
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Market development……acquisition potentialAmong the big acquisition opportunities are the portfolios of many shipping lines that are expected to face a difficult period and port owners - some of which are looking to do a.o. PPP type deals that essentially are asset sales.
Many single asset owners also sit with acquisition opportunities, some with full ownership of a terminal or a port and some with majority or minority holdings in specific assets.
…just a few examples…
Target Transaction value Acquiring partyPortek portfolio $146mn MitsuiTin Can Container Terminal (Zim lines 47.5% share)
$154mn China Merchants
Malta Freeport (CMA CGM's 50% share) $285mn Yildirim GroupDPW Australia portfolio (75% share) $1.5bn Citi Infrastructure InvestorsChennai International Terminals (Sical's 27% sare)
Not reported PSA International
ACS Dragados Spanish port portfolio €720mn JP Morgan led consortiumYantian International Container Terminals (APM Terminals' 9.7% share)
$520mn Cosco Pacific
Poti Sea Port (80% share) Not reported APM TerminalsSantos - BTP (50% from MSC) Not reported APM Terminals
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Market development……collaboration potential (1)
MATCHING Over the course of a port infrastructure project the nature of the investment changes from stage to stage. Investors (as well as operators and developers) all have different preferences, some are more suitable for green-field whereas others look for mature facilities. Likewise each constituent brings its own set of strengths and skills to the table that amongst others can allow the undertaking of larger projects.
SYNGERGIZING (1 + 1 = 3)Ultimately this is all about finding synergies between parties with different skills and needs to accelerate development that may not otherwise have been possible or less attractive.
Greenfield$1bn
Port Group
Oil Operator
Container Operator
Bulk Operator
Investment Fund
Development
•Private Equity
•Construction Company
Growth •Investment Fund
•Operator
Maturity •Pension
Fund
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Market development……collaboration potential (2)
TERMINAL OPERATORSAPM TerminalsOiltankingICTSIVopak
PORT OWNERSPort of RotterdamShanghai International Port GroupAbu Dhabi Terminal CompanySantos Port Group
CARGO OWNERSShipping linesMining and mineral companiesEnergy companiesIndustrial Zones
The port industry has thousands of different operators and port owners that are ready to collaborate for different types of projects at different stages of the project in different geographies.
Likewise on the side of the parties actually owning cargo there are many that either have a need to get better market access on the sea side or have existing facilities that they wish to outsource.
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Market development……collaboration potential (3)
INVESTMENT FUNDS AND PRIVATE EQUITYMacquarie Infrastructure GroupBrookfield Infrastructure PartnersJP Morgan Infrastructure FundCiti Capital Advisors
SOVEREIGN FUNDSAbu Dhabi Investment AuthorityChina Investment CorporationGovernment of Singapore Investment CorporationMalaysia Mining Corporation
PENSION AND INSURANCE FUNDSPing An (2nd biggest Chinese insurance fund)Ontario Teachers Pension FundATP (biggest Danish fund)APG (biggest Dutch fund, 3rd biggest globally)
The global investment fund sector manages more than $100 trillion. Many want to “get real” (assets) and “go direct” (ownership) - they want real assets with real purpose. Owners or developers of port assets are in an ideal position to tap into that.
Many of the major funds prefer getting in after the development and optimization of a given port asset and want substantial deal size - often $100+ million.
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DEVELOPERS OPERATORSINVESTORS
Free ZoneMarine Infra.Construction
ContainerOil & LiquidDry Bulk
CONSORTIUM
Pension FundPrivate EquitySovereign Fund
CARGO OWNERS
Shipping linesIndustrialsFabrication
PORT PARTNERS
AsiaLatin AmericaMiddle East
IMMEDIATE COVERAGE FOR INVESTORSFor those with an interest to enter, expand or invest in a specific region (e.g. China) and covering all the key markets within months.
REAL ENGAGEMENTOur on the ground network directly engages the local decision makers
COMPLEMENTARYA group of leading firms with complementary skills and objectives enabling a strong proposition towards ports.
SYNERGISTIC AND NO RISKNo heavy regional setup or local office before you start running
The PI ConsortiumA new model for investors, developers and operators
Market development……collaboration potential (4)
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APPENDIXThe deal pyramid step by step
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The PI Deal Pyramid……an overview Deal
Develop
Engage
Focus
$1bn
10-20
50-100
1,000-5,000
Purpose Target PropositionStep 0Create the foundation
Step 1Market intelligence and scanning
Step 2Engage the most relevant
Step 3Deal development
Step 4Closing the deal
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Step 0……defining purpose
Purpose
What is the purpose? Why are you looking for an acquisition, developments or partnerships?
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Step 0……identifying the target
Purpose Target
What specifically is relevant for you to target, who to partner with or what to develop?
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Step 0……creating the proposition
Purpose Target Proposition
With the target in mind what is your proposition to them? Why should someone welcome your investment, collaborate or partner with you?
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Step 1……focus
Deal
Develop
Expose and Engage
Focus
1,000-5,000
Purpose Target Proposition
This is about getting your market intelligence and scanning in place. It is about getting the right targets in sight. Without it you are going to be wasting valuable time and resources while others cut deals.
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Step 2……engagement Deal
Develop
Engage
Focus
1,000-5,000
Purpose Target Proposition
50-100
This is about creating true engagement – it is not about desk research it is about on the ground direct contact with the real decision makers and getting your proposition out there in the right form.
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Step 3……development Deal
Develop
Engage
Focus
1,000-5,000
Purpose Target Proposition
50-100
10-20
This is about fast-tracking and developing real leads, creating substantial opportunities and creating real leverage to close the deal.
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Step 4……deal Deal
Develop
Engage
Focus
1,000-5,000
Purpose Target Proposition
50-100
10-20
$1bn
Goal! Now use all the great efforts you did in step 0 to 3 to make many more!
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APPENDIXAbout Port Investor
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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:
