The main fields and management mode of downstream application of natural gas



At present, the types of city gas used in China mainly include artificial gas, natural gas and liquefied petroleum gas. Among them, the production cost of artificial gas is high, there is a certain pollution to the environment, and it is dangerous, and the use of artificial gas in the application is decreasing. The application of natural gas and liquefied petroleum gas has become the mainstream, and natural gas has a broader application development space because of its clean, environmental protection and safety characteristics.

Natural gas can be applied to residents' daily life, manufacturing, power generation and heating, transportation and many fields, and is closely related to users. Based on the industrial background of accelerating domestic urbanization process, rising demand for energy conservation and environmental protection, and continuous improvement of infrastructure and policies, after years of development, the application scope of natural gas has been expanding, gradually moving toward the main energy source, and the prospect is generally optimistic.

In order to improve the allocation efficiency of natural gas resources and ensure the security of national energy supply, China implements the policy of regional franchising of urban pipeline gas. The city gas franchise belongs to a class of municipal public utility franchise, and the enterprise has the right to operate exclusively within the franchise area, maintain the implementation of municipal pipeline gas, supply gas to users in the form of pipeline transportation, and provide emergency repair and emergency services of related pipeline gas facilities and so on.

Companies that have been granted urban gas concessions generally have their own regional transport infrastructure system to undertake upstream gas sources and sell them to applications. In recent years, the acceleration of urbanization has brought a lot of dividends to gas operations. According to Wind Information, from 2010 to 2015, the sales revenue of gas production and supply industry increased by 618.71%, and the total profit increased by 507.10%.

From the cost-benefit analysis, the upstream mining party and the importer have the price dominance of the transportation link at the same time, the gas pricing power is controlled by the relevant competent departments, the downstream application side has low bargaining power on the gas source price, the cost is basically transparent, the unit profit is basically fixed, and the scale effect can only be achieved through the growth of sales volume. Under the background of the gradual opening of upstream exploration and development and pipeline network facilities, some powerful gas companies are also seeking to extend the industrial chain to the upstream and storage and transportation links.

According to the main ways of domestic natural gas utilization, the downstream application fields can be divided into residential gas, industrial chemical power, power generation and heating, and transportation energy.

Household gas

As residential gas, natural gas is mainly used for cooking, heating and other fuels, and residential gas is the priority in China's natural gas consumption. During the "13th Five-Year Plan" period, the domestic urbanization rate is targeted at 60%, and the growing demand for efficient and clean natural gas in new urbanization will accelerate the construction of urban gas pipe network and improve the rate of natural gas in urban residents. It is estimated that each percentage point increase in the urbanization rate will increase the annual energy consumption equivalent to 80 million tons of standard coal, and accelerating the construction of new urbanization will bring benefits to the use of natural gas.

In the traditional business model of residential gas company, the cost includes infrastructure construction cost, gas source cost, management and labor cost, etc. The main income is initial installation cost and gas sales cost. The gas source price is the main factor affecting the economic benefits of enterprises, because the gas sales price is strictly controlled by the relevant departments, and is easily affected by various factors, in some cases, it is easy to form a civil gas price upside down, resulting in losses.

Recently, the National Development and Reform Commission issued a policy to rationalize the price of residents with valve stations, requiring the establishment of a flexible price mechanism that reflects changes in supply and demand, and decided to implement a seasonal price difference policy to encourage market-oriented trading. The gas involved in rationalizing the price of residential valve stations accounts for about 15% of the total domestic consumption, and it is expected that there will be follow-up adjustment measures.

Industrial chemical industry

Natural gas as an industrial fuel can be used in textile, building materials, electromechanical, petrochemical, metallurgy and energy industry and other fields, natural gas as a chemical raw material can be used in urea, methanol and liquefied LNG, industrial and chemical gas accounted for about 38% of the total.

The price of industrial and commercial gas is higher than that of domestic gas, and there is volatility. In recent years, the reform of natural gas prices mainly focuses on the field of non-residential gas, and the gas prices of industrial and commercial enterprises have gradually increased, and the problem of "cross-subsidies" has become prominent. Since 2017, the application form of "coal to gas" has been gradually rolled out, and the national natural gas consumption has been rising, but due to problems such as cost and application technology, the economy of natural gas as a chemical raw material has continued to decline, and natural gas accounts for a relatively high proportion of raw material costs. At present, the overall capacity of China's chemical industry is suspected to be excess, and the scale of the chemical gas market is expected to shrink.

Power generation and heating

Natural gas power generation is mainly realized by centralized gas-fired power stations and peaking power stations. By the end of 2017, the total installed capacity of natural gas power generation in China reached 76.29 million kilowatts, accounting for about 4.3% of the total installed capacity of power generation in the country.

In the traditional operation mode of gas-fired power plants in China, the costs mainly include infrastructure costs, fuel costs, operating costs, etc., and the income mainly depends on the sale of electricity.

Fuel costs account for about 70% of the cost. Under the existing gas supply system, the price of natural gas storage and transportation is high, and the cost of gas source is difficult to decrease. Gas power generation equipment relies on imports, coupled with the on-grid price does not have obvious advantages and other factors superposition, gas power enterprises cost pressure is heavy. At present, the cost of gas-fired power generation is about 2-3 times that of coal-fired power generation, and with the construction of storage and transportation facilities and the improvement of pricing mechanisms, the cost of natural gas power generation is expected to fall further.

The on-grid electricity price in the income adopts the way of cost plus, which is composed of cost, profit and tax. At present, there is no national unified gas power generation on-grid electricity price specification, mainly divided into two kinds of electricity price and single electricity price, determined by the local government price authorities, basically in the form of "one plant one price" and "one machine one price". It is estimated that the profit bottom line of the on-grid electricity price of gas power generation is about 0.55 yuan, and the natural gas peaking power plant is about 0.6 yuan.

Natural gas heating forms include gas-fired cogeneration, gas-fired boilers, "coal to gas" and so on. By the end of 2016, natural gas heating area in northern China was about 2.2 billion square meters, accounting for 11% of the total heating area.

The business model of gas heating enterprises is mainly to invest in infrastructure construction and operating costs, and obtain benefits in the form of heating fees. Taking Beijing as an example, natural gas heating costs are divided into wall hanging furnace heating and "coal to gas" central heating costs, do not consider wall hanging furnace investment and heating subsidies, urban residents household heating expenses average 2185 ~ 4804 yuan/heating season.

Transportation energy

The vehicles that use natural gas as fuel include city buses, taxis, logistics and distribution vehicles, passenger vehicles, sanitation vehicles, cargo vehicles and transport vessels. Relevant policies actively support the development of natural gas vehicles, while encouraging the development of natural gas vessels in inland rivers, lakes and coastal areas. At present, the number of natural gas vehicles in China is about 5.576 million, and more than 7,950 supporting filling stations have been built. At present, there are about 204 natural gas-powered vessels and 15 Marine refueling terminals.

In the traditional operation mode, gas companies, as transportation energy suppliers, mainly sell natural gas through the construction of filling stations. The cost includes infrastructure construction costs, gas source costs, operating costs, etc., and the income from the sale of natural gas is taken as the income. Natural gas fuel economy is outstanding, at the beginning of 2017, the oil and gas price ratio of major domestic consumption areas reached 0.53 to 0.6, which is equivalent to the same distance under the natural gas fuel cost is 53% to 60% of the fuel cost.

It is expected that the number of natural gas vehicles is expected to exceed 10 million in 2020, and the number of gasification ships will reach 60,000. In the long run, the development of natural gas vehicles and vessels needs to be accelerated, and the construction layout of gas filling facilities needs to reach a reasonable proportion.

Fit with finance lease

Natural gas application is an asset-heavy industry, the development of business has a certain dependence on infrastructure construction, the need to rely on a large amount of capital investment, the security of the capital chain in the process of sustainable development of enterprises is crucial. From the perspective of international experience, the introduction of financial leasing in the natural gas industry can achieve the goals of enhancing the financial strength of enterprises, avoiding financial risks, and improving the industrial chain layout.

The leasing objects of financial leasing can be natural gas fuel vehicles and vessels, gas storage equipment, liquefaction equipment, distributed energy equipment, gas station equipment and even various links of the entire natural gas industry chain facilities, to provide financial financing for equipment manufacturers and owners. According to the characteristics of the downstream application of natural gas, direct leasing, sale and leaseback and factoring can be adopted.

For owners who have equipment renewal, expansion and other needs, they can choose equipment suppliers through direct leasing, and the financial leasing company can purchase equipment according to the requirements of the owners for their use. It can not only alleviate the capital gap of the owners, but also improve the construction efficiency of the project, and realize the matching of cash expenditure and inflow.

Owners with a certain amount of equipment, vehicles or power station projects can use the form of sale and leaseback, during which the owner does not affect the normal use of their own equipment, but also can effectively activate fixed assets and improve capital efficiency. During the lease period, the owner of the equipment and the owner still enjoy the tax benefit of the depreciation of the equipment, thus receiving the tax financial benefit.

Enterprises can also take sales receivables with good credit as accounts receivable factoring transfers, obtain working capital support from financial leasing companies, improve financial statements, and speed up capital turnover. It is worth mentioning that the gas company can also combine the factoring business to help its downstream suppliers quickly withdraw funds, while increasing its own capital liquidity, shortening the expansion of the reproduction cycle, and achieving a win-win situation.