Page 5 - AsianOil Week 28 2022

AsianOil COMMENTARY AsianOil

China continues to
import record volumes
of low-priced Russian
crude.

build on its performance in 2021. According In another parallel with PetroChina,
to an average estimate of 12 analysts polled by CNOOC may be exiting some of its overseas
Bloomberg, the company is anticipated to post assets – notably in the US, UK and Canada.
a net profit of CNY115.6bn ($17.1bn) for the However, in CNOOC’s case, the potential
whole of 2022, up from CNY92.2bn ($13.6bn) moves are reported to be driven by concerns
last year. that those assets could become subject to West-
Alongside pursuing increased oil and gas ern sanctions.
production, PetroChina is also stepping up
development of renewables as it targets net zero What next?
emissions by 2050. The company sees natural While the state-owned giants are seeing their
gas as a bridge fuel, and wants it to make up 55% performance bolstered by higher energy prices,
of its total oil and gas output by 2025, up from China is also benefiting from low-priced imports
51.6% as of early 2022. of Russian crude, which is being shunned by
And while it continues to target oil and gas numerous other countries.
output growth, PetroChina is seeking to refine Earlier in July it was reported that the country
its global portfolio in a push that could poten- had extended record imports of Russian oil into
tially see it exit less profitable operations in Aus- June despite reduced demand on the back of
tralia and Canada, instead diverting funds to lockdowns. Russia is reported to have remained Demand is also
more lucrative assets in the Middle East, Africa China’s top supplier of crude in June for the sec-
and Central Asia. (See AsianOil Week 26) ond month in a row. now reported to
Low-cost supplies of Russian oil have come be recovering as
Similar path as a boon to Chinese refiners at a time when
CNOOC, which dominates Chinese offshore oil their margins have been hit by slowing demand. China bounces
and gas production, is treading a similar path. Energy analytics firm Vortexa has said that
Earlier this year, the company also set targets to state-owned Sinopec remains the top buyer of back from the
boost its oil and gas output for 2022, by 4.7-6.5% Russia’s ESPO blend crude. Refiners are also
in total, after raising it by 8.5% in 2021. taking in Urals crude that would traditionally strictest of its
Analysts also expect CNOOC’s profit for the be destined for Europe. lockdowns.
whole of 2022 to rise, reaching CNY121.5bn The rise in imports from Russia has allowed
($18.0bn) compared with CNY70.3bn China to cut back on more costly crude from
($10.4bn) in 2021. This comes after its prelimi- Saudi Arabia and Iraq. Demand is also now
nary net profit for the first half of 2022 was esti- reported to be recovering as China bounces
mated to have increased 112-118% y/y. back from the strictest of its lockdowns. But
CNOOC has also unveiled plans to ramp up some traders have warned that rising freight
capital expenditure on renewable energy as it costs could dampen China’s appetite for Russian
targets carbon neutrality by 2050 as well. Like oil in the near term.
PetroChina, it is treating gas as a bridge fuel and For now, though, China continues to benefit
seeking to raise its share in its overall production from the twin trends of higher crude prices and
mix to 33% by 2025. increased imports of low-cost Russian oil.™

Week 28 15•July•2022 www. NEWSBASE .com P5