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Sinopec trims 2020 capex, expands upstream budget
FINANCE & INVESTMENT
CHINA’S state-run Sinopec has announced plans to trim its 2020 capital expenditure by 2.5% year on year to CNY143.4bn ($20.19bn).
The listed arm of Sinopec Group intends to focus on cuts in its downstream division, while keeping its upstream spending roughly flat.
Sinopec said it had earmarked CNY61.1bn ($8.6bn) for exploration and production this year, compared with a CNY61.7bn ($8.68bn) investment in 2019 that exceeded last year’s tar- get of CNY59.6bn ($8.39bn).
The company’s focus last year was on developing the Shengli oilfield, oilfields in the Xinjiang region as well as the Fuling and Weirong shale gas projects. The company outlined that its priorities for 2020 would be building crude production capacity at its Shunbei and Tahe fields as well as at plays in the western Junggar Basin.
Sinopec heeded Chinese President Xi Jin- ping’s call in July 2018 to boost domestic output to ease a deepening reliance on energy imports, managing to increase its Chinese oil production while overseas output decreased.
The company produced 284.22mn barrels (778,700 barrels per day) of crude in 2019, down 1.5% y/y. Of that figure, domestic fields delivered 249.43mn barrels (683,400 bpd) – up 2% y/y, while overseas operations delivered 34.79mn barrels (95,300 bpd), down 12.1% y/y. Sino- pec produced 1.05tn cubic feet (29.74bn cubic metres) of natural gas in 2019, up 7.2% y/y.
Sinopec said that while the coronavirus (COVID-19) outbreak would weaken domestic demand for energy and chemical products in the first half, accumulated demand was expected to be “released rapidly after outbreak”. It added: “Due to the outbreak, the adjustment of the company’s production plan for 2020 is currently underway. We will confirm the production plan according to the market trends in the future.”
Sinopec’s refining division will reduce spending from CNY31.4bn ($4.42bn) in 2019 to CNY22.4bn ($3.15bn) this year, with the company focusing mainly on the construction and commissioning of the Zhongke project, and structural adjustment projects of the Zhenhai, Tianjin, Maoming and Luoyang facilities. The marketing and distribu- tion division will see its spending reduced from CNY29.6bn ($4.17bn) to CNY22bn ($3.1bn).
The capex budget for Sinopec’s petrochem- icals division will see a significant increase this year, however, from CNY22.4bn ($3.15bn) to CNY32.3bn ($4.55bn).
Sinopec’s crude throughput climbed 1.8% y/y in 2019 to 248.5mn tonnes (4.99mn bpd).™
Putin clears Gazprom to proceed with pre- investment phase of next gas pipeline to China
PIPELINES & TRANSPORT
RUSSIAN President Vladimir Putin has cleared Gazprom to begin preparations to build a sec- ond gas pipeline to China, running through Mongolia.
Putin gave Gazprom CEO Alexei Miller the order to proceed with the project’s pre-invest- ment phase, which involves a feasibility study, designs and surveying work, during a meeting on March 27.
Russia brought the Power of Siberia gas pipe- line on stream in December, enabling piped gas exports to China for the first time. The pipeline is due to ramp up to its full 38bn cubic metre per year capacity by 2025.
Moscow had been pushing for years for the construction of a second pipeline to China via Russia’s Altai region, entering China’s northwest- ern Xinjiang Province at the countries’ narrow
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w w w . N E W S B A S E . c o m Week 13 02•April•2020