Following a rise in crude oil prices, China's oil and gas industry is expected to bounce back in a big way this year, according to recent statements from industry leaders
A report today from Sinopec explained that exports continue to rise while domestic demand slows. The decrease in demand follows efforts to fight industrial pollution by shifting to natural gas for industrial fuel it said.
CNOOC, a major subsidiary of China National Offshore Oil Corp., announced plans to complete five new projects in 2018, including oil fields in the U.S., Weizhou, and Penglai, as well as two other gas fields, one in Dongfang and another offshore near Wenchang. The company said today it plans to drill 132 exploration wells and acquire 19,000 square kilometers of 3D seismic information for future projects. In total, the company's budget for capital expenditures in 2018 is between 70 and 80 billion yuan (between $11.1 billion and $12.7 billion) including exploration, development, and production.
Shares for CNOOC have generally increased since late August, with a small dip down to $12 per share at the end of January. The company's budgeted capital expenditures are the highest they've been in four years, up to 60 percent higher than the 50 billion yuan spent the past two years.
Compared to its two biggest competitors, CNOOC lacks some of their refining capabilities, and instead relies on revenue from exploration and production. It hopes to grow their production capabilities by up to 20 percent over the next four years.
CNOOC closed at $158.06 per share today, up 86 cents.
Sinopec, also known as China Petroleum and Chemical, said it is also looking forward to an increase in domestic oil product demand as the leader of China's shale gas sector. Last year, they pumped a record-setting 6 billion cubic meters of gas from their flagship location, roughly two-thirds of the country's total output of around 9 billion cubic meters. However, each cubic meter costs around 1.1 yuan to produce, and the company struggled to break even because of a lack of government support.
Sinopec ended the day down a slight 18 cents per share at $86.67.
PetroChina recently saw an increase in share prices as a result of the increased oil prices, but was also hit by government cost-control initiatives.
Shares in the company closed down almost 1 percent today at $78.33 per share.
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