SME/IPP Engagement with Chinese Energy SOEs along the Belt Road Initiative
(Room Garuda 8, 1st Floor)
20 Sep 18
9:30 AM
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11:00 AM
Tracks:
TRACK A - Trends, Projects and Strategies
China’s OBOR , ‘One-Belt, One-Road’ initiative, 一带一路, represents a two pronged overland and seaway, multi-trillion dollar investment strategy for critically needed infrastructure and energy upgrades in developing countries. OBOR is about expanding China’s financial and political clout worldwide with large-scale, wider ‘risk tolerated’ mega-projects that showcase and legitimize industrial proficiency. Under Chinese President Xi’s so-called “1+2+3” cooperation framework, energy initiatives form the backbone of the entire OBOR plan and since 2013; China has invested in over 1700 bankable OBOR projects mostly in fossil fuels. China's SOEs (state-owned enterprises) represent the tangible investment vehicles as much of the heavy construction, know-how, financing, and project management will be done by them, which are in turn backstopped by Beijing. While many opportunities exist for SME's/IPPF's worldwide along the OBOR, knowing how to involve in them, and what countries to entertain them in, is still a very fluid situation. SME’s/IPP’s in particular, are more suitable for these type of ‘mobility’ projects than large cap Western energy firms such as Shell, that require longer project timelines with defined IRR’s, and which may also be politically compromised in home countries due to political and environmental concerns. SME’s/IPP’s seeking to engage with Chinese SOE’s must demonstrate proficiency in two core areas for OBOR projects: Standards and Local Knowledge. For example, Chinese companies have their own ‘GB’ (guobiao) standards may not easily adapt with API. Local knowledge of the investment conditions in situ concerns planning for the three interconnected areas of technology transfer, local content, and skills transfer. OBOR is more about political acceptance and cooperation and less about raw technical proficiency. SME’s/IPP’s that can bridge the ‘competency gap’ between SOE’s and host government initiatives will have tremendous ‘first-mover’ advantage.