China’s two big oil majors urge tax breaks for building gas storage and imports

A Sinopec worker walks past liquefied natural gas (LNG) storage tanks at an LNG terminal in Tianjin. (REUTERS)
Updated 08 March 2018
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China’s two big oil majors urge tax breaks for building gas storage and imports

BEIJING: Top officials from China’s two largest oil and gas producers have urged the government to offer tax breaks for the building of gas storage facilities and importing liquefied natural gas (LNG) to help avoid another gas crunch in the winter ahead.
Sinopec Vice President Ma Yongsheng said the central government should subsidize the construction of underground gas storage, LNG tanks and other facilities.
China National Petroleum Corp. (CNPC) President Wang Yilin urged the government to refund value added tax on LNG imports to lower gas costs for consumers.
Members of parliament and the Chinese People’s Political Consultative Conference, the Communist Party’s largely ceremonial advisory body, are encouraged to submit suggestions for future legislation during the current Parliament session.
Their chances of becoming legislation are minimal, but they can form part of future laws.
The proposals from Sinopec and CNPC come as the nation looks for ways to increase storage capacity for natural gas to avoid a repeat of this past winter’s heating crisis.
Millions of households in northern China switched from using coal to natural gas for heating before this winter, leading to rocketing gas consumption as well shortages across many regions.
The fuel shortages over the last three or four months deepened China’s worries over whether it can secure enough gas and LNG supplies in the winters ahead.
CNPC’s Wang said China’s gas demand will grow 15 percent to 16 percent in 2018 and supplies will continue to be tight, according to a transcript of his speech to a parliament meeting session published in CNPC’s official newspaper.
Sinopec’s Kong Fanqun, who heads the Shengli Oil field said a lack of storage facilities also contributed to China’s gas shortages this winter, according to a transcript of his speech sent to Reuters by the Sinopec Group.
The country needs an additional 50 billion cubic meters (bcm) of storage facilities by 2020 to meet its own demand, Kong said. That is five times the size of China’s current gas storage facilities.
Kong asked the government to give gas producers subsidies as well tax breaks to build and operate gas storage facilities.
Both Sinopec and CNPC officials also proposed removing resource taxes on the development of shale gas, coalbed methane, high sulfur gas and tight gas reserves.


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 24 March 2019
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Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.