00:00People are wondering, they see a gas company and immediately will think how things in the Middle East are affecting
00:05you.
00:06If you could elucidate for us what direct or indirect impact you are seeing or expecting because of what's taking
00:14place globally.
00:15Okay, thank you for having me here.
00:18The Tang gas that we manufacture here in Hong Kong and our Tai Bu plant in the new territories,
00:24and the first stop basically of two elements.
00:27One is NAFA, as you just mentioned.
00:30The other is natural gas.
00:33Starting from the year 2006, before that we've been using 100% NAFA to manufacture Tang gas.
00:41Starting from the year 2006, we have a long-term contract with the natural gas supply in Australia.
00:48So basically the gas coming all the way from Australia.
00:52And it did not pass food through the Middle East.
00:57So the gas supply should be safe.
01:00And also this is a long-term contract.
01:02We call it take or pay contract.
01:05In other words, I have to buy a certain quantity of natural gas.
01:09The supplier has to supply that quantity of natural gas to us at a predetermined fixed price.
01:16This is a 25-year contract.
01:19Okay.
01:20And the price was fixed in the year 2006.
01:23Oh, oh, that's coming up.
01:25Anyway, okay.
01:25Yeah.
01:26I want to share with you that have we not used natural gas since 2006?
01:33We continue to use NAFA.
01:35Okay.
01:35That means NAFA price is always up and down.
01:38And then basically since 2006 up to now, we save Hong Kong dollars $20 billion to our Hong Kong customers
01:47because the natural gas price is very busy.
01:52So this is a situation here in Hong Kong.
01:55Now, the supply from Australia should be continuous.
01:58Now, what about NAFA?
02:00NAFA could be a different story because given the current chaotic situation in the world, in the whole world.
02:05But NAFA also confirmation that supply, basically, are all based in Asia.
02:12And we have the inventory, at least one and a half months inventory, on site in our type of plant.
02:19So basically, we will continue to manufacture the tank gas for at least one and a half months.
02:25And then also, in addition to that, we have short-term contract for three to four months,
02:32which will already sign the contract and fix the price before the war, right, before the war.
02:38So basically, we will be pretty sure that for the next three to four months,
02:45if nothing goes beyond our expectation, we should be safe.
02:51Okay.
02:51In terms of supply and in terms of price.
02:54Okay.
02:56Yes, it's good that you secure some of these contracts already to buy you some time.
03:00But gas prices across the region are already surging.
03:05What sort of premium are you attaching to some of your forecasts now,
03:08if this prolongs to beyond three, four months?
03:12And, you know, it's something that you are going to have to absorb,
03:15or can you pass it on to customers?
03:18Now, there are a couple of things we can do.
03:21One is, let's say, the war prolongs longer, and we can use more natural gas.
03:27Okay.
03:28I want to explain a little bit more on that.
03:30Currently, natural gas accounts for 60% of tank gas when we manufacture tank gas.
03:39And the other 40% is NAFA.
03:42We can etch up the percentage of natural gas to 70%.
03:47If there is a shortage of NAFA, we can etch it up,
03:50because the natural gas coming from Australia is secure.
03:56And the price is low, too.
03:57So if NAFA, the price should drop,
04:00we can use more natural gas to protect our Hong Kong customers.
04:04Okay.
04:04How does it affect your earnings projections for the year?
04:09What scenarios have you gamed out for the company?
04:11For the time being, we still take a positive approach, right?
04:14Nobody knows.
04:16It's really unpredictable what's happening.
04:19The conflict creates all these chaotic and unpredictable challenges.
04:25So we monitor the situation very closely.
04:29We keep an eye on, in particular, the NAFA supply, right?
04:33So we will make sure that another supply will be safe.
04:37What indications are you getting on the NAFTA?
04:40Because that seems to be affecting not just you, of course.
04:42That is more, to your point, right?
04:44That's more market-determined and moves on a more regular basis.
04:48Right now, we can see the price edge up.
04:50That's for sure.
04:51Because NAFTA and oil, the price go hand in hand.
04:54It's an edge up, but a bit, but not too much.
04:57As I mentioned earlier, we can use more natural gas in case of that, if that happens.
05:03You also have a JV in China, and you do provide some town gas and renewable energy solutions there.
05:10What are you seeing in terms of this Iran war?
05:13Does it have any sort of impact, you think, on gas consumption in China?
05:17And does it only ramp up this whole sort of push to renewables that we're seeing?
05:21Well, in the year 2020, central government already announced 2030, 2060, carbon peak, carbon neutrality.
05:31That was a very good strategy.
05:33So, basically, the energy in China, 50% of which is import, right?
05:41The central government foresee that.
05:43And so, that is why more renewable energy will be happening in coming years.
05:48And that, basically, energy in its own hand is better than depending on our own suppliers.
05:55Now, we have 320 city gas in China.
05:58We have a total of 45 million household customers.
06:02Hong Kong is only 2 million.
06:05And so, now, natural gas in China, they are coming from different sources.
06:12China has huge gas reserves in Xinjiang, in Indian Mongolia, in Sichuan.
06:19So, that account for approximately 60% of the total consumption in China.
06:24And the other, we got from Russia.
06:27We got two pipelines connecting to the central grid here in China from Russia.
06:34And also, we have pipelines from Central Asia.
06:38Central Asia, they also do a huge gas reserve.
06:41So, the pipelines are being connected.
06:43And the other is from Myanmar.
06:46They also have a pipeline connecting to our central grid here in China.
06:50So, these three sources, pipe gas, they are nowhere near Middle East.
06:58And so, we should be safe.
07:00And, of course, there are some LNG imports, right, from Qatar.
07:04And, as I understand it, it accounts for approximately 10% of the total natural gas and LNG from import.
07:15So, that may affect a little bit.
07:18But the gas consumption, I can see that because central government, in particular, will have more renewable.
07:26And renewable, basically, is to help to balance renewable energy and natural gas.
07:33We, Hong Kong and China Gas, we already started this renewable business five years ago.
07:38And we have 400,000 commercial industrial customers.
07:43In particular, those industrial customers, the rooftop is basically empty.
07:48We lay PV panels to supply green electricity to them.
07:52So, help them to reduce carbon emission.
07:55So, we supply natural gas to them to reduce their used to be heavy carbon emission energy.
08:02And then, the renewable PV panels to help them reduce carbon emission.
08:08So, we are helping China to achieve the 2013-2016 target.
Comments