How does the oil company keep out the cold caused by the collapse of the new crown pneumonia epidemic? At the promotion meeting on mobilization of quality improvement and efficiency improvement held by China National Petroleum Corporation (hereinafter referred to as CNPC) on April 16, Dai Houliang, Party Secretary and Chairman of CNPC Group, said that although the company’s overall work was running smoothly, the new pneumonia epidemic and The oil prices plummeted “two black swans” superimposed, which caused a double squeeze on the supply and demand sides of the oil and gas market, and the Group’s production and operations were hit as never before.
“In the coming period, the downside risks of the world economy will increase, international oil prices may remain at a low level for a long period of time, the company ’s international business epidemic prevention and control situation pressure will increase, The pressure to prevent epidemic input continues to increase, and the situation facing the oil and gas industry is still very grim. “Dai Houliang proposed to take quality improvement and efficiency as the most urgent task at present, adopt super-conventional thinking, revolutionary measures, and resolutely complete all mission goals. “All costs can be reduced”, turning “winter” into “winter training”.
In the last round of oil price plunge a few years ago, the performance of the domestic “three barrels of oil” was hit to varying degrees. China National Petroleum Corporation (CNPC, 601857.SH; 0857.HK), a listed company of PetroChina, had a net profit of only RMB 7.9 billion in 2016, and from 2005 to 2014, PetroChina ’s annual net profit exceeded 100 billion yuan. Although they are all integrated upstream and downstream companies, the impact of low oil prices on China Petroleum & Chemical Corporation (Sinopec, 600028.SH; 00386.HK), which is downstream of the industrial chain structure, has a smaller impact than PetroChina.
Now low oil prices are coming again in the cold winter. In the past three months, international oil prices have plummeted by more than 60%. In the face of weak demand, OPEC + ‘s historic production cuts failed to boost oil prices. On April 17, WTI crude oil futures plunged again, falling below the $ 19 per barrel mark, setting a new low since 2002. In 2017 and 2018, domestic oil companies that benefited from the rebound in oil prices and achieved performance gains now have to tighten their “trouser belts” again.
The unified action of global oil companies to deal with the last round of oil prices during the cold winter is to cut investment and reduce costs, and this time the same. Many international oil companies including Shell, ExxonMobil, Total, and BP have announced that they will strengthen management and reduce capital expenditures in response to the ultra-low oil price environment.
Compared with international oil companies, “three barrels of oil” also faces a special and difficult task: the “seven-year action plan for increasing reserves and increasing production” that has achieved initial results. It is necessary to compress the cost and expenditure, but also unswervingly carry out the task of increasing reserves and increasing production, how to balance the two?
Dong Xiucheng, a professor at the University of International Business and Economics, believes that under the double impact of the epidemic and low oil prices, “three barrels of oil” is no longer a “tight day”, but a task It’s better to be prepared for “bitter days”. He suggested that the “three barrels of oil” should also take into account the company’s benefits while taking on the task. “When adjusting planned expenditures, it is necessary to ensure that exploration efforts remain unchanged, geological cognition and search for oil and gas cannot be stopped, and make preliminary preparations for future increase in reserves and production. However, appropriate adjustments can be made in oil and gas exploration and the pace of slowing down in special periods, To avoid high costs and inventory pressure. “
Sinopec Group directors at the” 100 Days of Attacking and Creating Effectiveness “action mobilization (video) conference held in late March The Secretary of the Party Committee and the Party Leadership Group proposed that “100 days of hard work, 100 days of hard work, and 100 days of quick work will promote the full return of production and management to the right track.” On April 7, Wang Dongjin, Secretary of the Party Leadership Group and Chairman of CNOOC Group, “resolutely” In the video conference on the deployment of the “Responding to the Challenge of Low Oil Price Challenge”, it was stated that it will be fully prepared for the long-term response to low oil prices. “The annual domestic crude oil and natural gas production target will not be shaken. The annual investment will be reduced by 10% to 15%. Less than 10%, to achieve a cost reduction of 5 billion yuan through the promotion of special actions for cost reduction and efficiency improvement, and a loss reduction of 5 billion yuan in the governance of loss-making enterprises. “
In 2019 The performance conference, Chief Financial Officer China Petroleum Chaishou Ping said the company is preparing a capital expenditure program linked to oil prices. The overall principle of this optimization plan is to adhere to within-meet-to-pay, strive to achieve positive free cash flow, insist on highlighting key points, and keep pressure. Sinopec said that due to the impact of the new coronary pneumonia epidemic, the 2020 production and operation plan is currently being dynamically adjusted. In the future, the annual production and operation arrangements will be determined based on market trends. Xu Keqiang, CEO of China National Offshore Oil Corporation (CNOOC, 00883.HK; NYSE: CEO; TSX: CNU), said in a performance call that, given the impact of the current epidemic and oil prices, the company will make capital on 2020 based on the original plan Sexual expenditure and net output targets are adjusted to a certain extent.