The goal of carbon neutralization accelerates the transformation of energy structure, and natural gas is an important tool for China to usher in the turning point of carbon peak. Natural gas is a fossil energy with high calorific value and low carbon emission, and the carbon emission per unit calorific value is only about 60% of that of coal. We believe that under the constraints of China’s dual carbon goal, natural gas, as a clean primary fossil energy, will be an important tool for China to slow down the growth rate of carbon emissions. On the premise that the proportion of non fossil energy use has not increased significantly, natural gas will play an important role in China’s “carbon neutralization road”. According to the calculation of Chinese scholar Xu Bo and others in the analysis of natural gas consumption trend in China’s 14th five year plan, China’s natural gas demand CAGR is expected to reach 5.8% from 2021 to 2025.
Natural gas pricing is highly regional, and China’s market-oriented pricing and regulation coexist. The global natural gas pricing mechanism has a certain regional color. North America and Europe adopt a fully market-oriented pricing method, and the Asian natural gas import price is linked to the crude oil price; China’s LNG and unconventional gas price mechanisms have all been marketized, and the outgoing price, pipeline transportation fee and gas distribution fee of pipeline gas are controlled by the government’s guided price. In the future, with the continuous development of global natural gas trade, the natural gas pricing mechanism will tend to global integration.
There is high certainty in the medium and long-term supply and repair of global natural gas. 1) Us natural gas is expected to accelerate its entry into the global market. Thanks to its vigorous promotion of LNG Export liquefaction capacity construction and the superposition of China’s pipeline construction to promote the substitution of pipeline gas for China’s LNG consumption, the U.S. LNG Export grew rapidly. From 2016 to 2020, the CAGR of U.S. LNG Export was as high as 97.7%. We expect that by 2025, the export liquefaction facilities and pipeline transportation capacity of the United States will double to further strengthen the LNG export capacity. 2) The export natural gas of Russia is mainly supplied by pipeline gas. The “Beixi 2” natural gas pipeline directly supplied to Europe has been completed, and the production capacity of “Beixi 2” is about 10% of the European natural gas demand in 2020. If “Beixi 2” starts to supply gas to Europe, it will effectively alleviate the pressure of European natural gas demand.
China’s dependence on natural gas imports has increased, and the construction of inlet facilities can be expected to grow. The main sources of China’s self-produced natural gas are the three major state-owned oil companies – PetroChina, Sinopec and CNOOC. In recent years, subject to the slowdown in the growth of capital expenditure, the growth rate of natural gas production is less than that of sales, and the dependence on imports continues to rise. The import price of China’s pipeline gas is lower than that of LNG, and the gas supply of China Russia east line is gradually increasing, which will become one of the main increments of natural gas import in the future. The construction of LNG terminal is progressing steadily. We expect that China’s total LNG receiving capacity is expected to reach 180 million tons / year by 2025, which will effectively ensure the LNG supply capacity.
Investment suggestion: with the strong promotion of carbon neutralization goal, China’s natural gas demand is expected to continue to grow, and natural gas producers will fully benefit from the rise in natural gas prices; Under the background of increasing import demand, the construction of natural gas terminal is expected to accelerate. We recommend: 1) self produced gas faucet The Petrochina Company Limited(601857) (a + H) of imported gas business turning losses into profits; 2) the Enn Natural Gas Co.Ltd(600803) focusing on the main natural gas industry and achieving high growth in H1 performance in 21 years; 3) binding with international crude oil giants and Jiangxi Jovo Energy Co.Ltd(605090) of LNG business increment. It is suggested to pay attention to: 1) the business of LNG terminal exceeds expectations and has Guanghui Energy Co.Ltd(600256) excellent core assets of LNG terminal ； 2) New Austrian energy focusing on the main business of urban combustion; 3) Kunlun energy, focusing on natural gas terminal retail and high growth of its core business; 4) Focus on Xinjiang Xintai Natural Gas Co.Ltd(603393) , Shanxi Blue Flame Holding Company Limited(000968) of CBM mining business.
Risk analysis: industry cycle risk, the risk that the demand is less than expected due to the continuous covid-19 epidemic, and the risk that the construction of import facilities is less than expected.
