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CHINA TO UP PRIVATE INVESTMENT IN STATE-OWNED ENERGY SECTOR
China said it is planning to increase private investment into its state-owned oil and gas companies and is considering cuts to the industry’s outsized workforce, reports Brian Speegle.
The Chinese government said it wants to make its oil and gas companies more efficient by increasing private capital and competition, while liberalizing energy and fuel prices, according to a document of the plan first reported on by the official Xinhua News Agency on Sunday.
The plan calls for the market to “play a decisive role in resource allocation” and increased participation by private companies in oil and gas exploration in China, Xinhua said. The industry now mainly consists of three state-owned corporations: China National Petroleum Corp., China Petrochemical Corp. and China National Offshore Oil Corp.
“Together, China’s three state-owned major oil companies employ several million people. Those vast payrolls have long been a big stumbling block to make the companies more efficient,” Mr. Speegle noted.
SAUDI MINISTER SAYS OIL PRODUCERS READY TO EXTEND CUTS
Saudi Energy Minister Kahlid al-Falih on Sunday said that the Organization of Petroleum Exporting Countries and other producers are eager to extend a deal to cut crude oil output by nine months, report Margherita Stancati and Summer Said.
The extension of the deal, agreed last year between OPEC’s 13 members and 11 other oil producers including Russia, would help to continue to alleviate a global supply glut and boost prices, Mr. al-Falih said.
The Saudi minister’s comments came days after Saudi Arabia and Russia—the world’s two largest producers of crude oil—said output cuts should be extended into the first quarter of next year, pushing prices upward.
Still, it is unclear whether the production cuts are having as robust an impact on the market as intended.
“Resurgent output from U.S. shale producers has blunted OPEC’s efforts, and prices—after a brief boost—have swung between $48 and $52 a barrel in the past month,” Ms. Stancati and Ms. Said wrote.
OIL COMPANIES GEAR UP FOR PEAK OIL DEMAND
Oil companies are preparing for global oil demand to peak and then fall in what could be the “biggest shift in energy consumption since the Industrial Revolution,” report Lynn Cook and Elena Cherney.
New technologies, such as batteries in electric cars, are widely expected to reduce the amount of gasoline and diesel necessary to fuel transportation. But there is not yet a consensus between companies and energy experts on when precisely demand will peak.
Some European producers like Royal Dutch Shell PLC have predicted the peak could come by 2025 or 2030, while the U.S.’s two biggest oil companies, Exxon Mobil Corp. and Chevron Corp., do not expect demand to peak anytime in the near future. The International Energy Agency, meanwhile, has said demand should grow slowly past 2040.
“Calling it accurately is high stakes for an industry sitting on trillions of dollars of crude-oil reserves. Whenever it finally does happen, the tipping point from global oil-demand growth to decline will reverberate through the energy world, knocking down oil prices and some companies’ shareholders,” Ms. Cook and Ms. Cherney write.
MARKETS
Oil prices continued to climb on Monday, pushing futures to their highest levels in more than a month, ahead of Thursday’s meeting of OPEC where production cuts will be discussed.
Brent crude, the global oil benchmark, rose 0.8% to $54.03 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.9% at $51.12 a barrel.
Gordon Kwan, head of regional energy research at Nomura, said deeper production cuts of more than 2 million barrels a day may be on the card as Saudi Arabia is showing signs of impatience with the pace of rebalancing, which is happening slowly as U.S. producers have stepped up output this year.
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May 22, 2017 at 03:47PM
from Christopher Alessi
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