Exploring the strategies of the Asian NOCs

Gas plays an important role for Guangdong to achieve its carbon peak goal. Multiple policies support its long-term demand growth. Its LNG demand will double from 20 mt to 40 mt by the late-2030s underpinned by the gas demand growth. With NOCs’ contracts filling their own and PipeChina’s regas capacity, another 18 mmtpa LNG from provincial companies and IOCs is needed to fill the demand gap. Due to the imminent higher Central Asian gas prices and lower LNG prices, companies can take advantage of this window of opportunity to sign new LNG contracts, gaining competitiveness over others.

NOCs were once big spenders in international upstream business development (BD) but recent activity has slumped. A series of deals gone wrong – exacerbated by the 2014/15 oil price crash – have dampened M&A, with many Asian NOCs, doubling down on the development of local resources. But with M&A valuations attractive – relative to prevailing commodity prices – and financial ratings at all-time highs, the drivers for NOCs to invest in existing portfolios AND fill strategic gaps have never been stronger. Will they step up? In this Insight, we answer the following questions: Chinese NOCs: will they overcome bureucratic red tape to do deals? Asian NOCs: why are they about to reach an inflection point in gas? Middle East NOCs: why are they fast-tracking international expansion? Exploration: what is driving an improvement in NOCs' international performance? M&A: what will the NOCs look to buy?