1. Confidential Jonathan Schmidt Juergen Franzen
Beibuwan Energy Corridor Creating a petrochemical industrial zone to serve central China and ASEAN
Confidential
Jonathan Schmidt
Juergen Franzen

2. opportunity
The investor has the opportunity to take a controlling interest in a major gas and oil supply and downstream petrochemical development, strategically positioned in the southern Chinese province of Guangxi.
energy corridor to supply high-growth central provinces of Sichuan, Yunnan and Guanxi. [500m in population; 12%+ growth p.a.]
Integration of ASEAN economies and China, Beibuwan strategy, tying together the region
China-ASEAN free trade zone comes into effect in 2010; trade has grown to US$200bn and projected to triple in 5 years
Deal as proposed would create a petrochemical industrial zone in the heart of China’s free trade zone with ASEAN.
Secure controlling interest in bunkering facility and adjacent land licensed for petrochemical estate at steep discount [approx €80m], if move quickly.
Allow dictate entire downstream development and associated pipeline and refinery projects

3. Integration of SE Asia with western China
Beibuwan development plan
November 2006 Presidents of China and
ASEAN economies signed Beibuwan
development agreement
coordinated development strategy –
US$100bn in rail, road and port already underway,
Linking China as far south as Singapore.
Expand region’s energy and petrochemical industry
-- US$20bn in related projects in aggregate
with 100 downstream petrochemical industries
to be located at petrochemical industry park
Fuels, intermediate and end user products to supply
China and ASEAN
Free trade zone between ASEAN and China
comes into effect in 2010; target oil company has
energy wholesale license (population 1.7 billion
aggregate GDP USD 2 trillion)

4. Indicative current project pipeline include
Guangxi bunkering and petrochemical industrial zone
Oil supply and expansion of existing bunkering facility [2m tons p.a.]
Gas supply and participation in building of gas terminal
Control nafta cracker plant build
Control downstream petrochemical industries in own petrochemical industrial park
Bunking and pipeline facility in Vietnam
Own and develop gas concessions in Indonesia

5. What should consortium partner firms bring to the table?
Possibly a banking institution to coordinate development - bring in partner companies and finance
Provide full range of resources and management
Secure supply of oil and gas
Management knowhow and finance to develop gas terminal and cracker.
Bring in downstream petrochemical industries [open bidding for international firms and/or select strategic partners]
Can move quickly – secure key position to avoid competitive bid [Abu Dhabi]

6. Guangxi oil bunker complex is region’s lynch pin property
Option 1: Investor can act as an arm length supplier – but will miss out on downstream opportunity
Option 2: Secure controlling position by acquiring shares in existing oil bunkering company, Guangxi Guangming Warehouse Company
Owns harbor access and the land licensed for petrochemical development
Wholesale license enables sell of products direct to end user
Gateway for full downstream development and cracker plant.
Alternatives in acquiring Guangming
FK architectures a packaged deal, and investor bids
a competitive environment [Abu Dhabi]
expensive
Or avoid a bidding situation by locking in position with oil supply for shares barter arrangement using a Chinese intermediary company.
Acquire assets and land for “Chinese prices” – avoiding a foreign premium.
Gradualist expansion of gas terminal and downstream operations.
Puts investor in control of energy hub, while building market understanding and minimizing risk .
Flexibility on related deals [Indonesia, Vietnam, Taiwan, etc]

7. summary
Investor has the opportunity to gain controlling interest in bunkering and petrochemical estate, providing full control of downstream industry development
Supplier of oil and gas to participating partners
Trade products in both in China and throughout ASEAN
Lead investment in other regional BOT and energy infrastructure projects related to Beibuwan

8. suggested next steps
meet interested parties to discuss project
execute confidentiality agreement and fee schedule
provide details of investment opportunity
arrange visit to China to meet appropriate operations management and government officials and further due diligence

9. FK boutique investment consultants
early stage China and SE Asia direct investment and corporate finance
related deal experience
Guangxi province port expansion
Guangxi province development bank
Merck petrochemical plant [Taiwan]
Infrastructure, food, media/publishing
Partners
Juergen Franzen (chair) – former Chancellor Kohl top Asian trade representative, former Taiwan and Thailand diplomat
Jonathan Schmidt (partner) – former director Financial Times Group, Asia; World Economic Forum
Kartika Kaliman (partner) – former head of private banking SE Asia, Merrill Lynch
FK advisory board
Ma Kai – Central Committee and minister state development and reform commission [NDRC] (head of energy strategy policy for China)
Hu Deping – Vice Minister of the Central Party United Front, exec vice Chairman of ACFIC
Other Chinese senior military and government leaders