G20 SUBSIDIES FOR OIL, GAS AND COAL PRODUCTION: CHINA

This data sheet is a background paper to the report Empty promises: G20 subsidies to oil, gas and coal production by Oil Cha
Overseas Development Institute (ODI). It builds on the research completed for the report The fossil fuel bailout: G20 subsidies
published in 2014.

For the purpose of this report, production subsidies for fossil fuels include: national subsidies, investment by state-owned
finance. The full report provides a detailed discussion of technical and transparency issues in identifying fossil producti
methodology used in this desk-based study. In addition, a brief outline of the methodology used in this report is also in th

The authors welcome feedback on the full report, on the country study, and on this data sheet to improve the accuracy and tran
government support to fossil fuel production.

Read the full report: http://odi.org/empty-promises

Read the China country study: http://www.odi.org/publications/10092-G20-subsidies-oil-gas-coal-production-China

Contents:
National subsidies
SOE investment
Public finance (summary)
Public finance (domestic - full)
Public finance (international - full)
National subsidies (million USD - except where otherwise indicated)

Targeted Estimated
2013 2014
Subsidy Subsidy type energy Stage: annual
estimate estimate
source amount
Tax expenditure
Resource-Tax (资源税) Abatements and Tax break and
Refunds for Gas extraction refunds Gas Production 93.46 93.46 93.46
Resource-Tax (资源税) Abatements and Tax break and
Refunds for Oil extraction refunds Oil Production 576.32 576.32 576.32

Temporary tax and fee relief (Shanxi,

Inner Mongolia and Shaanxi) Tax waiving Coal 1584.11 1584.11 NA
The Management Measures of Natural
Gas Infrastructure Construction and Pipeline operation
Operation ND Gas and devleopment NA NA NA
Exploration fee waived for Shale Gas Tax waiving Gas Exploration NA NA NA
Change in the Special Oil Income Levy Tax break Oil Production NA NA NA

Exemption of business tax on overseas Construction and

operations in construction and international
international transportation Tax break Oil and Gas transportation NA NA NA
Other support mechanisms
Raising import tariff Price support Coal Production NA N.A N.A
Waving import tariff for certain advanced
equipment Price support Coal Production NA N.A N.A

Provision of service
Exemption for land use fee of coal mines below market value Coal Production NA NA NA
Providing Inner Mongolia producers with
coal railway transportation below fair Provision of service
market rate below market value Coal Production 1121.5 1121.5 NA

Total (annual average 2013 and 2014) 3,375

Source

OECD 2015

OECD 2015

Xue, H., Wang, H., Bridle, R., Gerasimchuk, I., & Attwood, C. (2015). Subsidies to Coal Production in China .

http://energypolicy.columbia.edu/sites/default/files/energy/China%20Shale%20Gas_WORKING%20DRAFT_Sept%2011_0.pdf
Ernst and Young (2013) Global Oil and Gas Tax Guide.
http://www.mzcan.com/hongkong/01555/announce/202/EN/EW01555-ann_6LBFDaN9c3b6.pdf

CNPC 2014 annual report: Directive on Business tax Exemption Policies Regarding Buying or Selling Personal Financial Products
(CS [2009] No. 111) and the Directive on Business Tax Exemption for International Transportation Services (CS [2010] No.8)

Xue, H., Wang, H., Bridle, R., Gerasimchuk, I., & Attwood, C. (2015). Subsidies to Coal Production in China .

Xue, H., Wang, H., Bridle, R., Gerasimchuk, I., & Attwood, C. (2015). Subsidies to Coal Production in China .

Xue, H., Wang, H., Bridle, R., Gerasimchuk, I., & Attwood, C. (2015). Subsidies to Coal Production in China .

Xue, H., Wang, H., Bridle, R., Gerasimchuk, I., & Attwood, C. (2015). Subsidies to Coal Production in China .
SOE Investment (USD million - except where otherwise indicated)

Project /
Name of SOE (national level)
Investment

Exploration and
upstream
Sinopec
capital
expenditure
Exploration and
upstream
Petro China
capital
expenditure
Exploration and
upstream
CNOOC
capital
expenditure

Capital
expenditure
Huadian Resources

Capital
expenditure
China Coal

Capital
expenditure
China Huaneng Group Corporation

Capital
expenditure
China Datang Corporation
Capital
China Guodian Corporation expenditure

Capital
Shenhua Group
expenditure

Capital
China Resources Power
expenditure

Capital
Shenhua Group
expenditure

Total (annual average 2013 and 2014)

Note: There are several national level Chinese SOEs involved
in fossil fuel power generation - where fossil fuels make up
less than 95% of total generation capacity the investments of
these SOEs have not been included in our estimates (see
China Country Study). In addition there are several sub-
national SOEs producing oil, gas and coal, which are not
included in the remit of this study.
ed)

Value Value
Fossil Fuel Annualised
Description Stage
Sector 2013 2014 Average Value

Exploration and upstream capital

Oil and gas Production 13,069
expenditure
13,265 12,874

Exploration and upstream capital

Oil and gas Production 37,945 35,888 36,916
expenditure

Exploration and upstream capital

Oil and gas Production 14,570 16,257 15,414
expenditure

Capital expenditure (planned

Coal Production 374 354 364
expenditure)

Capital expenditure (actual

Coal Production 4,690 3,558 4,124
expenditure)

Capital expenditure (coal segment -

Coal Production 288 186 237
planned expenditure)

Capital expenditure (coal segment

not including coal chemical Coal Production 233 96 164
engineering - planned expenditure)
Capital expenditure (coal segment -
Coal Production 140 95 118
planned expenditure)

Capital expenditure (coal segment -

Coal Production 1,345 1,086 1,215
actual 2013, and planned 2014)

Electricity
Capital expenditure (property, plant
(96.5% Generation 2,812 2,206 2,509
and equipment)
fossil fuel)
Electricity
Capital expenditure (property, plant
(97.5% Generation 1,736 3,025 2,381
and equipment)
fossil fuel)
76,512
 Source:

Rystad, 2015

Rystad, 2015

Rystad, 2015

http://www.cninfo.com.cn/finalpage/2013-04-27/62439745.PDF?COLLCC=190993879& http://file.finance.sina.com.cn/211.154.219.97:94

ttp://www.chinacoalenergy.com/n43869/n43882/n43884/n43889/n43890/c57647
1/attr/576472.pdf
http://www.chinacoalenergy.com/n43869/n43882/n43884/n43889/n43890/c7921
97/attr/792206.pdf

http://www.hpi.com.cn/reportYA/600011_2012_n.pdf http://www.hpi.com.cn/reportYA/%E5%8D%8E%E8%83%BD%E5%9B%

http://www.cninfo.com.cn/finalpage/2013-03-26/62272486.PDF http://www.cninfo.com.cn/finalpage/2014-03-27/63733653.PD

http://www.cninfo.com.cn/finalpage/2013-03-30/62305331.PDF http://www.cninfo.com.cn/finalpage/2014-03-25/63719767.PDF

http://www.shenhuachina.com/cs/Satellite?c=sh_news_p&cid=1382685132733&pagename=shenhua_china_en%2Fsh_news_p

http://www.cr-power.com/en/InvestorRelations/AnnualReports/201504/P020150427586804022240.pdf
586804022240.pdf
Public finance summary (USD million - except where otherwise indicated)

Oil and gas

Coal fired Upstream oil and pipelines, power
Coal mining
power gas plants and
Institution name refineries
Domestic
China Export-Import Bank 91
China Development Bank 91

Subtotal domestic - - 183 -

International
China Development Bank 2,000 1,270 12,022 7,670
Export-Import Bank of China 304 3,309 1,325 1,963
Industrial and Commercial Bank of 50 639 202 341
Bank of China 234 304 424
Sinosure 234 180
Additional state-owned banks 234 53
Multilateral development bank share 0 71 46 186

Subtotal international 2,354 5,991 14,079 10,638

Totals 2013/2014 2,354 5,991 14,262 10,638

 Annual avg.
Total fossil fuel fossil fuel
finance 2013 & 2014 finance

91 46
91 46

183 91

22,962 11,481
6,901 3,451
1,232 616
962 481
414 207
287 144
304 152

33,063 16,531

33,245 16,622
Public finance domestic (full) (USD - except where otherwise indicated)

Project
Institution Project Name
Country

Pan Asia / Africa/

EXPORT-IMPORT BANK
Americas / Euro LNG China
OF CHINA
Vessels Acquisition

EXPORT-IMPORT BANK
LS36-1 Gas Field China
OF CHINA

CHINA DEVELOPMENT
LS36-1 Gas Field China
BANK
e otherwise indicated)

Fossil Fuel Sector (oil

Description
& gas or coal)

The Export-Import Bank of China will provide approximately $400 million financing to
back the construction of four 174,000 m3 LNG carriers at Hudong-Zhonghua
Shipbuilding. The four new LNG vessels were jointly ordered by CNOOC Energy
Technology and Services, China LNG Shipping, Teekay LNG Partners and BW’s LNG
investment arm. Hudong-Zhonghua will deliver the LNG carriers from September 2017
to January 2019. The four vessels will transport LNG from BG’s Queensland Curtis
Island LNG project in Australia, from which CNOOC is buying liquefied gas. The four oil & gas
LNG vessels will be built by Hudong-Zhonghua in China. China Exim Bank, The Bank
of Tokyo Mitsubishi UFJ, Sumitomo Mitsui Financial Group, Australia & New Zealand
Banking Group Ltd - ANZ, Mizuho Financial Group, Industrial & Commercial Bank of
China - ICBC and Bank of America has financed $787m debt for the deal. ANZ also
acted as the financial adviser to the sponsors on this transaction. Norton Rose
Fulbright LLP advised the lenders

CDB has syndicated a loan for Primeline and its affiliate company Primeline Petroleum
Corp to finance their share of the costs of the LS36-1 gas field development. The
LS36-1 gas field is located in 84m of water in the East China Sea about 150km from
the major city Wenzhou. The syndicate consists of CDB and China Export and Import
Bank (EXIM) as joint lead arrangers and Shanghai Pudong Development Bank
(SPDB) as participant and agent bank. The facility will be made available to Primeline
oil & gas
and PPC on a joint borrower basis secured on their respective interests in the
Development. The facility will be for a total amount of US$274 million (of which the
Company’s share is US$ 205.5 million) and will be repayable over 9 years at an all-in
interest rate of LIBOR+4.7%. NOTE: The exact share of the loan being provided by
each of the three syndicate members is not stipulated in any of the listed sources;
hence, an arbitrary allocation of $91.33 million is allocated to each.

CDB has syndicated a loan for Primeline and its affiliate company Primeline Petroleum
Corp to finance their share of the costs of the LS36-1 gas field development. The
LS36-1 gas field is located in 84m of water in the East China Sea about 150km from
the major city Wenzhou. The syndicate consists of CDB and China Export and Import
Bank (EXIM) as joint lead arrangers and Shanghai Pudong Development Bank
(SPDB) as participant and agent bank. The facility will be made available to Primeline
oil & gas
and PPC on a joint borrower basis secured on their respective interests in the
Development. The facility will be for a total amount of US$274 million (of which the
Company’s share is US$ 205.5 million) and will be repayable over 9 years at an all-in
interest rate of LIBOR+4.7%. NOTE: The exact share of the loan being provided by
each of the three syndicate members is not stipulated in any of the listed sources;
hence, an arbitrary allocation of $91.33 million is allocated to each.
Development Phase
(Upstream or Stage Value Not counted Period
Downstream)

Downstream Transportation $393,500,000 2014

Upstream Exploration/Extraction $91,333,333 2014

Upstream Exploration/Extraction $91,333,333 2014

Source

https://ijglobal.com/data/transaction/31574/pan-asia-africa-americas-euro-lng-vessels-acquisition-2014

https://ijglobal.com/data/transaction/32261/ls36-1-offshore-gas-production-project; https://ijglobal.com/articles/94062/primeline

https://ijglobal.com/data/transaction/32261/ls36-1-offshore-gas-production-project
Public finance international (full) (USD - except where otherwise indicated)

Institution Project Name Project Country

CHINA DEVELOPMENT BANK Cilacap II Indonesia
CHINA DEVELOPMENT BANK Celukan Bawang Indonesia
EXPORT-IMPORT BANK OF CHINAPangkalan Susu SteamIndonesia
EXPORT-IMPORT BANK OF CHINATakalar Steam Coal PoIndonesia
INDUSTRIAL & COMMERCIAL BANRatu Nusantara FPSO Indonesia
INDUSTRIAL & COMMERCIAL BANRatu Nusantara FPSO Indonesia
Description
The funding will support the construction of a new 660-MW coal power plant. NOTE: One source lists the plant size as being 61
China Huadian Group Co, one of China's five largest state-owned power generation enterprises, started construction of a coal-f
In July 2013, Indonesia's electric utility agency Perusahaan Listrik Negara (PLN) signed a contract with Chinese state-owned co
Located in Punagaya, South Sulawesi Province, Indonesia, the Takalar Coal Fired Power Station has an installed capacity of 20
The proceeds are used to finance the development of the floating, production, storage and offloading unit “FPSO Ratu Nusanta
The proceeds are used to finance the development of the floating, production, storage and offloading unit “FPSO Ratu Nusanta
Fossil Fuel Sector (oil & gaDevelopment Phase (UpStage Value Not Counted
coal Downstream Electricity Product $700,000,000
coal Downstream Electricity Production $638,000,000
coal Downstream Electricity Product $373,009,532
coal Downstream Electricity Product $240,983,000
oil & gas Upstream Extraction $5,000,000
oil & gas Downstream Storage $5,000,000
Period Source
2013 http://www.pimagazine-asia.com/news/other-news/china-development-bank-to-bankroll-614mw-indonesian-coal-pr
2013 http://www.sourcewatch.org/index.php?title=Celukan_Bawang_power_station; http://www.shangbaoindonesia.com
2014 http://china.aiddata.org/projects/39372; http://www.sourcewatch.org/index.php/Pangkalan_Susu_power_station; ht
2014 http://china.aiddata.org/projects/39373; http://www.bappenas.
2014 https://ijglobal.com/data/transaction/28342/ratu-nusantara-fpso
2014 https://ijglobal.com/data/transaction/28342/ratu-nusantara-fpso
 Notes
hina-development-bank-to-bankroll-614mw-indonesian-coal-project; http://www.dcengineering.asia/en/galery-of-cilacap-expansion-1x660m
n_Bawang_power_station; http://www.shangbaoindonesia.com/dynamic-cina-komunitas/中国国家开发银行与印尼巴厘能源公司-举行3x142m
ourcewatch.org/index.php/Pangkalan_Susu_power_station; http://www.djppr.kemenkeu.go.id/page/load/1177
financed by a Preferential Buyer's Credit
antara-fpso
antara-fpso
 f-cilacap-expansion-1x660mw.php; http://www.tdb.org.cn/news/677898; http://www.pp.u-tokyo.ac.jp/research/dp/documents/GraSPP-DP-E
印尼巴厘能源公司-举行3x142mw燃煤.html; http://europe.chinadaily.com.cn/business/2012-08/29/content_15715688.htm; http://www.thejakar
documents/GraSPP-DP-E-14-003-SOM.pdf
8.htm; http://www.thejakartapost.com/news/2010/10/29/2-chinese-firms-build-new-coal-plant.html; http://www.pp.u-tokyo.ac.jp/research/dp/
u-tokyo.ac.jp/research/dp/documents/GraSPP-DP-E-14-003-SOM.pdf