Energy supply-demand imbalances 'an urgent problem'
Updated: 2015-03-06 07:31
By CUI JIA/DU JUAN(China Daily)
|
|||||||||
An oil-drilling platform in Qingdao, East China's Shandong province, Jan 6, 2015. [Photo/IC] |
The big three oil companies are learning to live with idea that crude prices may not recover soon. China Petroleum & Chemical Corp (known as Sinopec), PetroChina Co and CNOOC Ltd are cutting spending and controlling costs to cope with crude's plunge in the past seven months that has already crimped 2014 earnings.
Fu Chengyu, chairman of Sinopec, said on Jan 15 that profit from exploration and refining "fell off the cliff" in the fourth quarter.
"Chinese explorers have to find a way to deal with low prices rather than hoping for a sudden rebound to save them," said Shi Yan, an analyst at UOB-Kay Hian Ltd in Shanghai. "Low crude prices are here to stay."
The old way of doing business of relying on increasing production and boosting refining margins was "dead", Fu said in a Jan 16 statement on the Sinopec's website. Brent crude, the benchmark for half the world's oil trading, has fallen 46 percent in the past seven months.
PetroChina may post a 53 percent profit decline in the fourth quarter, while Sinopec may see a 77 percent drop, according to a research note from JPMorgan Chase & Co on Jan 18.
CNOOC, the nation's biggest offshore oil and natural gas producer, which has no exposure to refining, may report a 48 percent decrease in second-half earnings, according to JPMorgan.
"Fourth-quarter earnings will probably be just 20 percent that of the third quarter," said Gordon Kwan, Nomura Holding Inc's Hong Kong-based head of regional oil and gas research. "Earnings for these companies can be downgraded by 80 percent for the rest of the year if oil remains at these levels."
Based on $60 a barrel crude for 2015, Barclays Plc has forecast that PetroChina, CNOOC and Sinopec's annual earnings to drop 44 percent to 73 percent.
CNOOC will cut capital spending by as much as 35 percent to about 70 billion yuan ($11 billion) this year, the State-owned offshore explorer said after its annual strategic preview meeting on Feb 3.
- Six things you may not know about Awakening of Insects
- Top 10 favorite gift brands of rich Chinese men
- Buddha statue with mummified monk is museum draw
- Across Canada March 4
- Seven things you may not know about Lantern Festival
- Top 10 destinations for Chinese tourists
- Floods displace over 2,000 in Brazil
- New sports cars debut Geneva motor show
Most Viewed
Editor's Picks
Annual legislative and political advisory sessions |
Spring Festival trends reflect a changing China |
Patent applications lead the world |
BC lures Chinese tourists |
Festival Special: Apps that make holiday shopping easier |
Alibaba places China smartphone business bet with $590m Meizu deal |
Today's Top News
China likely to maintain 7% growth for 20 years
China's top two train makers to merge
Finance Minister: no spending spree
US fails to grasp China's terror laws
Militaries' cooperation 'key' in ties
China, California address climate, energy issues
US companies bullish on China
China faces 'formidable challenges', says Li
US Weekly
Geared to go |
The place to be |