China’s Oil Majors Open Their Checkbooks to Fight Fuel Scarcity
China’s oil majors are boosting spending to take advantage of high prices and help meet political demands for energy security.
(Bloomberg) -- China’s oil majors are boosting spending to take advantage of high prices and help meet political demands for energy security.
The country’s three state-owned drillers are planning capital expenditure of at least 530 billion yuan ($84 billion), up 4.6% from 2021. PetroChina Co. and Sinopec are budgeting for more spending than any oil major outside Saudi Aramco, despite smaller market capitalizations than many Western giants.
The spending plans align with Beijing’s emphasis on energy security as it tries to keep economic growth steady amid persistent virus outbreaks and skyrocketing global commodity prices. The country has broadly pushed for more domestic production since tariff wars with the U.S. began in 2018, highlighting its vulnerability as the world’s biggest importer of oil, gas and coal.
Sinopec is planning an 18% spending increase to 198 billion yuan, a record for the company, while offshore driller Cnooc Ltd. is aiming for 90 billion to 100 billion yuan, a slight increase from 2021. PetroChina plans to spend 242 billion yuan next year -- it had budgeted 239 billion for 2021, but the final figure came in at 251 billion.
China called for companies to boost gas production and keep oil output at high levels in its five-year plan for energy development published last week. PetroChina Vice President Ren Lixin echoed the theme on an earnings call Thursday, saying the company would maintain stable oil output while increasing gas.
“Oil growth will slow and gas will be bread and butter for them now,” said Henik Fung, an analyst with Bloomberg Intelligence.
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With assistance from Bloomberg