On the occasion of the Spring Festival in the year of the tiger, international oil prices hit a seven-year high. After the festival, the trend of crude oil and oil service sectors was strong. Analysts believe that China’s unconventional oil and gas development is expected to continue, and are optimistic about the development prospects of China’s industrial chain companies under this round of upward oil price cycle.
However, on the evening of February 8, the “international oil price is expected to impact US $100, and the performance of the oilfield service sector can see the high line?” At the theme teleconference, China Oilfield Services Limited(601808) former executive vice president and current independent director of Sinopec Oilfield Services Co., Ltd. and independent director of Huashang International Marine Energy Technology Holding Co., Ltd. Chen Weidong took a relatively cautious attitude. “Constrained by the bottleneck of production capacity and geographical conditions, even if the crude oil price remains high in the future, the prosperity of exploration, mining and construction machinery in the upstream will not increase too much. For private capital, there are few investment opportunities in the upstream of Petrochina Company Limited(601857) industry, mainly in the petrochemical field downstream of the industrial chain,” he said
multiple factors affect the trend of oil price
On February 6, the recent month contract of WTI crude oil closed at US $92.31 per barrel and the recent month contract of Brent crude oil closed at US $93.27 per barrel. The international oil price has risen for the seventh consecutive week. Major overseas banks have predicted that, affected by the demand for economic recovery and the geopolitical crisis in Russia and Ukraine, oil prices will continue to rise and exceed US $100.
For how to view the trend of oil prices in the next two years, Chen Weidong analyzed that the long-term effect, short-term effect and other factors affect the current trend of oil prices. Among them, the long-term effects include the dispute over oil prices in 2015, Sino US trade frictions, and global energy transformation.
\u3000\u3000 “In 2014, the investment in the upstream of oil was close to US $800 billion, and the revenue of the whole oil service industry was US $474 billion. Generally, about 60% of the investment in the upstream of oil and gas will be converted into the revenue of oilfield service companies. At present, this law still exists. After Saudi Arabia and Russia knocked down the oil price in 2015, the investment in the upstream of oil has not been restored. In 2021, The investment in the upper reaches of the oil field is less than 500 billion US dollars, and the income of the oil service industry is about 220 billion US dollars. The oil price dispute in 2015 has led to a decrease in the upstream investment in the oil field to some extent, which has also disrupted this rule. The process of pressure foam production in the whole oilfield service industry has not yet been completed. In addition, the Sino US trade friction has affected the world economy and caused global investment confusion to a certain extent. In addition, from a global perspective, the action to reduce greenhouse gas emissions and carbon emissions has been carried out for many years. “Most OECD countries have completed the process of” carbon peak “. Global energy related emissions account for about 80-90% of the total carbon emissions, of which coal and oil are the main energy sources of carbon emissions, and the core issue of emission reduction is energy transformation. Chen Weidong said.
For the short-term effects affecting the trend of oil prices, Chen Weidong said: “At the beginning of the epidemic, the demand for oil was reduced due to the impact of transportation and production control. At present, with the global epidemic easing and economic recovery, the oil price has increased. In addition, OECD countries have been increasing subsidies and releasing money in the past two years. Quantitative easing policy has made money liquidity very sufficient, which has pushed up the value of assets, especially bulk commodities Commodity price. In addition, OPEC is more cautious about relaxing production capacity and maintaining oil prices at a certain high level as far as possible. “
In Chen Weidong’s view, the oil price may rise slightly in a short time, but it is unsustainable. For this year’s oil price forecast, Chen Weidong said: “this year, if the oil price can be generally maintained at about $65-85, it is also possible to break through $90 / barrel in the short term, but the oil price above $90 / barrel will be an unsustainable price fluctuation.”
oil service industry as a whole “pressure foam to capacity” situation is still
The oil service industry is dominated by oil price. The change of oil price directly affects the adjustment of capital expenditure of oil and gas companies, especially the capital expenditure in the field of exploration and development, thus affecting the operating performance of the upstream oil service industry. Halliburton executives said that the expenditure of North American oil drilling companies may increase by more than 25% this year, while the expenditure of overseas exploration companies will also increase slightly by about 15%. Lium LLC, a data analysis company, predicts that US shale oil production will “boom again” this year.
Chen Weidong pointed out that the valuation of the international oil service industry is still in the process of going to the bubble. “At present, the largest offshore drilling operator in the world has a market value of about $2 billion 100 million. Transoceanic drilling has 41 platforms for deep-water and harsh sea conditions, and $2 billion 100 million is only a replacement value for 3 platforms. The valuation of the offshore drilling industry was less than US $one billion at the lowest level last year, not enough for the value of two platforms. Chen Weidong said.
Chen Weidong said: ” Petrochina Company Limited(601857) Most private enterprises in the equipment manufacturing industry do not rely on China’s international markets. China’s oilfield service equipment and personnel account for half of the global share. At present, most of the fracturing, drilling and drilling tools used in western countries are made in China. At present, the industrial chain of China’s oilfield service industry is the most complete industry in the world. Except that materials, components and high-end electronic control equipment need to be imported, there is no obvious problem of chain missing. “
According to the China Oilfield Services Limited(601808) strategic outlook, it is estimated that the total global upstream exploration and development capital expenditure in 2022 will increase by 24% compared with 2021, and the total global upstream offshore exploration and development capital expenditure in 2022 will increase by 15% compared with 2021. For CNOOC’s 2022 business strategy and development plan, Chen Weidong said: “investors can take it as a reference. During the implementation of the capital investment plan, corresponding adjustments will be made according to the specific situation.”
“Rich coal, poor oil and less gas” is the basic feature of China’s energy structure. The results of the national dynamic evaluation of oil and gas resources (2010) show that the annual output of Petrochina Company Limited(601857) can be maintained after 2030. Chen Weidong said: “China’s proven oil reserves account for only 1.5% of the world’s total, and its annual output of crude oil has remained at 5% of the world’s total for many years. It is the world’s fifth largest oil producer and has achieved great success. In the long run, affected by the bottleneck of resource endowment, even if the crude oil price remains high in the future, the prosperity of upstream exploration, mining and petroleum equipment manufacturing will not increase too much.”
In 2020, the external dependence of Petrochina Company Limited(601857) and natural gas will rise to 73% and 43% respectively. On February 4, China and Russia signed an agreement on Russia’s delivery of 100 million tons of oil to China through Kazakhstan for a period of 10 years. At the same time, China and Russia signed a second long-term natural gas contract for 30 years. Analysts believe that, on the whole, only by vigorously exploiting conventional oil and gas resources and unconventional resources such as shale oil and gas can we further ensure national energy security.
It is understood that the oil service business is divided according to the location of crude oil exploitation, which can be roughly divided into land and sea businesses. In onshore business, in addition to conventional oil and gas development, there are unconventional oil and gas development, such as shale oil, shale gas, tight oil and coalbed methane. The State Council’s action plan for carbon peak before 2030 proposes to accelerate the large-scale development of unconventional oil and gas resources such as shale gas, coalbed methane and tight oil (gas).
Chen Weidong said: “China’s geographical environment is different from that of the United States. The United States has most plains and more hills in China. In mountainous areas, shale gas and tight oil (gas) are often buried deeper and the exploitation cost is higher. Therefore, how to reduce the exploitation cost is a problem that needs to be solved.”
investment opportunities in petrochemical industry
It is understood that the oil industry is generally divided into three parts: upstream, midstream and downstream. The upstream task is mainly to exploit the underground oil, which is generally divided into three links: exploration, development and production; The main task of the middle reaches is to store and transport oil; The downstream task is oil processing and sales, including oil refining, chemical industry and sales.
In Chen Weidong’s view, Petrochina Company Limited(601857) industry’s investment focus is not in the upstream, but in the downstream. According to Chen Weidong, the revenue of Petrochina Company Limited(601857) natural gas industry in 2020 was 11.4 trillion yuan, of which oil and gas exploitation and production accounted for 8%, equipment manufacturing accounted for 2%, oil refining accounted for 40% and petrochemical industry accounted for 50%.
Chen Weidong said: “At present, 85% of the world’s oil is used as fuel, including refined oil, gasoline, diesel, kerosene, etc.; 15% of the oil is used as raw material, namely petrochemical industry. Under the vision of carbon peak, many countries use oil resources and aim at petrochemical industry. Relevant people predict that from 2040 to 2050, the proportion of oil as raw material and fuel will account for half respectively. As far as China is concerned, China has a wide market Broad, the demand for petrochemical products will be more, and the proportion of oil as raw materials may be higher. “
“At present, Petrochina Company Limited(601857) There are still some deficiencies in chemical related technologies and products, such as the formula, process and process of the refinery, and the refining efficiency needs to be improved and improved. In addition, to a certain extent, there is a relative shortage of high-end products and a relative surplus of low-end products. For the petrochemical industry, there is room for development in these directions. The upper reaches of Weidong are more open to private capital than the lower reaches, Chen said.
