International oil prices have plunged more than 60% in the past three months, falling below the $30 mark.
Under the imbalance of supply and demand, low oil prices may be the normal situation that the energy industry, especially the petrochemical industry, has to face in the future.
Faced with the dual pressure brought by the epidemic and the oil price collapse, sinopec announced that from March 23 BBB 0 on June 30 in the whole system to launch the "100 days to make progress" operation, and petrochina, cnooc also stressed to "tighten the time".
"Three barrels of oil" will be through a series of measures to expand the market, optimize adjustment, reduce capital expenditure, and spare no effort to complete the annual production and operation tasks.
Supply and demand imbalance low oil prices may become normal
On March 6, when a new round of "Opec +" production cut talks broke down, Saudi Arabia quickly launched a "price war", offering unprecedented discounts to all its crude buyers.
Oil-producing countries began to increase production and cut prices to grab the market.
Saudi oil giant aramco said supplies would reach 12.3 million barrels a day in April, allowing it to produce crude at its maximum capacity of 12 million barrels a day over the course of a year without any new capital expenditure.
Russia responded by saying it had the ability to boost production by 500,000 b/d to a record 11.8 million b/d.
Iraq, Nigeria, the united Arab emirates, Kuwait and other countries have also announced to join the army to increase production.
While supply has soared, demand has slumped.
Covid-19 has spread globally, and many countries and regions have taken control measures, and economic activity has slowed significantly.
Below this, international oil price falls ceaselessly.
Light crude for may delivery settled at $24.49 a barrel on the New York mercantile exchange as of March 25, while London brent crude for may delivery closed at $27.39 a barrel.
Standard & poor's global ratings cut the 2020 price assumptions for brent crude and west Texas intermediate by $10 a barrel each.
The current assumption is that brent crude will average $30 a barrel for the rest of 2020 and wti $25.
Citigroup expects global oil consumption to fall by 4m b/d, with demand shrinking by 11m b/d in the second quarter, with oil averaging about $17 a barrel or less.
Standard chartered also warned that average oil demand would fall by 3.4m b/d year on year in 2020, with brent's low in the second quarter "likely to be well below $20 / b".
Dai houliang, chairman of petrochina, said that with the peak market demand approaching, perhaps in a long period of time, the current "stress state" of falling oil prices will become the oil industry will have to face the low oil price volatility in the future.
The energy industry has been hit by both the pros and cons
The normal state of low oil prices affects the whole world.
For China, the advantages and disadvantages coexist, and the energy industry, especially the petrochemical industry, suffers certain impact.
"As the world's largest oil importer, low oil prices can certainly save a lot of money on oil bills, which will also drive down gas and coal prices."
Beijing international energy experts club President Chen xinhua said.
China imported 510 million tons of crude oil in 2019, up 9.5 percent from the previous year, with a cumulative import value of 241.319 billion us dollars, data showed.
From January to February 2020, China imported a total of 86.088 million tons of crude oil, up 5.2 percent year-on-year.
That's not good news for the oil and chemical industries, which will see record lows on several measures in 2019.
According to a report released by the China federation of petroleum and chemical industries, revenue in the domestic oil and chemical industries grew 1.3 percent in 2019, while total profit fell 14.9 percent, both the lowest in four years.
Refining profits fell 42.1%, the biggest drop in five years.
Profits in the chemical industry fell 13.9%, the biggest drop in a decade.
Lower oil prices will also have a negative impact on upstream exploration and development and the oil services sector.
Standard & poor's global ratings said the big oil companies' rating buffers were at risk because of dimmer oil price expectations.
The main cost per barrel of oil in 2019 was $29.78, according to a March 25 earnings release from cnooc.
Xu keqiang, cnooc's chief executive, said it was unlikely that cnooc would achieve another 2019 profit in 2020 given the current low oil prices.
Each show the skill "three barrels of oil" fight together
In Mr Dai's view, oil companies must be prepared to face long-term and complex challenges and fight a "protracted war" against low oil prices.
He stressed that the development of enterprises should not rely on the rise of oil prices, high oil prices do not necessarily bring high profits, and low oil prices do not necessarily lead to low competitiveness.
Recently, CNPC held a meeting to plan the special action of improving quality and efficiency in 2020, and proposed to firmly deepen the thought of "tightening the day" and pass the pressure from layer to layer.
We should make full use of the counter-force mechanism of low oil prices, review the industrial chain from the perspective of value management and value creation, consolidate advantages, make up weak links, give play to synergies, tap into the potential of chain effectiveness, and stimulate the vitality of chain effectiveness.
We should enhance the driving force of enterprises, truly realize the transformation from resource-driven to innovation-driven, and enhance the "jinzhong jar" and "iron cloth shirt" to resist the risk of market shocks.
We need to expand the community of market interests, build on the momentum of win-win cooperation and enhance our capacity for sustainable development.
Cnooc group also held meetings in recent days to deploy countermeasures, emphasizing the idea of "tightening the belt".
Wang dongjin, chairman of the group, said at a recent meeting that it was necessary to maintain strategic focus, actively respond to the severe challenges brought by the steep drop in the international oil price to the company's production and operation, adhere to the eyes inward, hard exercise internal work, increase revenue, reduce costs and increase efficiency, and take revolutionary measures to minimize the impact of low oil price.
He revealed that the company has developed measures to adjust and optimize its plans for exploration and development production, including capital expenditure reduction and further reduction of oil and gas costs.
"The cost is higher overseas than at home, and the effort overseas may be greater."
Sinopec chairman Zhang Yuzhuo said, will be crucial effect ", "one hundred, action, and communities in the exploit market, optimizing adjustment, thus the authors, four dimensions of power production safety work, efforts to resolve the outbreak and oil prices tumbled to bring the double pressure of, strive to achieve better business performance, in the second quarter to complete the annual production and operation and economic benefit target to lay a solid foundation.
It is understood that during the "100 days to make breakthroughs" campaign, sinopec will take ten key measures, including: to focus on high-quality oil and gas exploration and efficient development, adhere to the "investment, reserves, production, cost, efficiency" unified optimization;
We will actively increase production, increase sales and increase efficiency of natural gas, tap internal and external potential, and accelerate the construction and production of natural gas.
We will do a good job in optimizing and increasing the efficiency of the refining sector, and make the processing capacity more favorable to enterprises with good market and profit margins. At the same time, we will do a good job in reducing the cost of crude oil procurement, flexibly adjust the diesel fuel ratio, adjust the export structure, and improve the export efficiency.
We will promote the upgrading of the chemical industry business, closely link production and marketing, optimize the product structure, step up the development of new products, and increase production of high value-added products.
We will do a good job in expanding the oil sales market, optimize logistics operations, reduce costs and costs, and improve the scale and quality of our operations.
We will do a good job in reducing inventory costs, and reduce inventories of crude oil, refined oil and chemical products in an orderly manner.
We will actively promote the construction of key projects, ensure that by the end of June, the refinery unit of the china-malaysia refinery integration project will be put into operation, and the main structural adjustment projects in luoyang, tianjin and maoming will be completed.
We further strengthened cost control and reduced non-productive expenditures by more than 20% on the basis of the budget at the beginning of the year.
We will focus on the centralized operation of funds and increase efforts in low-cost financing.
It is worth noting that while reducing costs and increasing efficiency, oil and gas companies are also actively seeking new areas of development.
It is reported that on March 22, China national offshore oil corporation (cnooc) 's mawei strait I fishery installation project successfully completed the loading operation in zhoushan, zhejiang province, marking its first foray into deep-sea fishing.
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