International Trading Business. Shen Dingcheng China National Petroleum Corporation

Transcription

1 International Trading Business Shen Dingcheng China National Petroleum Corporation September 10, 2007

2 Outline 1. The Position and Role of CNPC 2. Status of International Trading Business 3. The Prospect of International Trading Business 2

3 1. The Position and Role of CNPC We all know that the Chinese economy has been growing rapidly for many years. The economic growth, together with the heavy investment in chemical industry and the continual increase in the number of automobiles, has driven up the demand for oil. The apparent consumption of oil products has been increasing by more than 6% annually in the recent years and reached 345million metric tons in Import of crude oil continues to increase at a fast pace and it now represents 46% of total crude consumption in China. We expect oil consumption will continue to increase during a long time in the future. 3

4 1. The Position and Role of CNPC CNPC is the largest producer and supplier of crude oil and natural gas in China. Of the total output of crude oil and natural gas in China, 58% of crude and 75% of natural gas are produced by CNPC. Currently CNPC has the capacity to process up to 142 million metric tons of crude oil per year, which represents 40% of the total quantity of crude being processed in China. As far as sales volume of refined product is concerned, we have a market share of 43% in the country. CNPC has 35,000 kilometers of pipeline network and more than 18,200 gas stations all over China. 4

5 Outline 1. The Position and Role of CNPC 2. Status of International Trading Business 3. The Prospect of International Trading Business 5

6 2. Status of International Trading Business In 2006, China imported 145 million metric tons of crude oil. In terms of crude import origins, Middle East has the biggest share. However, its share has been decreasing over time while the shares of Africa, Middle Asia and Europe, as well as South America have been increasing. Middle Asia, Europe, 13% America, 7% Asia Pacific, 4% Africa, 32% Middle East, 44% origin of crude import in 2006 of China 6

7 2. Status of International Trading Business The diversification of transportation modes In 2006, crude import by CNPC accounted for 22% of the total import volume in China. We employ two transportation modes to import crude oil: by sea and by land, with each mode serving as a complement to another. As for growth rate, land shipment tends to develop at a fast pace while ocean shipment will keep a certain increase. By ship Sino-Kazakastan pipeline, 6% CNPC Crude import modes By pipeline By railway, 33% By railway By shipment, 61% 7

8 2. Status of International Trading Business The diversification of resource origins Origin of crude importation in 2006 of CNPC America 16% Others 7% West Africa, North sea, Mediterranean sea 16% Middle Asia, Russia 46% Middle east 15% The structure of resource origin is so designed that it helps to secure our supply. With regard to the grade of crude, most of the import was light sweet crude oil. 8

9 2. Status of International Trading Business The diversification of crude grades Currently our import is mainly light sweet crude oil, but the share of heavy and sour crude oil is increasing. In 2006, one third of crude imported into China was heavy sour crude oil. Light (middle) /sweet crude High sulfur,high tan,heavy crude ratio increasing 9

10 Outline 1. The Position and Role of CNPC 2. Status of International Trading Business 3. The Prospect of International Trading Business 10

11 3. The Prospect of International Trading Business It is estimated that the annual growth rate of oil product consumption in 2007 will stay above 6% in China and import will increase by more than 10%. In the next few years crude import will continue to stay at a considerable level. Apparently the increase in domestic crude output lags behind the demand for oil products in China. With the construction of new refineries and the expansion of existing refineries in progress will further relieve the issues arising from insufficient refining capacities. Strategic Petroleum Reserve (SPR) and commercial inventory are under construction. Facing the opportunities and challenges, CNPC are willing to cooperate with all business partners in oil market, to enhance better understanding of each other and achieve mutual development. 11

12 3. The Prospect of International Trading Business The Trends of International Trading Business Diversification of Resource Origins We will pay attention to reasonable resources origin: strengthen the resources from neighboring countries; keep stable purchase from middle east and develop other resources. Diversification of Crude Grades We will concern to import light together with heavy crude and gradually to increase the ratio of high sulfur heavy crude importation. Diversification of Transportation Modes We will improve pipeline transportation capacity, at the same time continue to enhance and develop the scale of marine transportation 12

13 3. The Prospect of International Trading Business Question: The United States is a major consumption place of oil products, but it did not add much new capacity (CDU) in the last twenty years or so. Some practitioners in this industry believe global oil price actually reflect the price of U.S. market and argue that the lack of refining capacity in the United States is among the major factors that drive up oil prices in the global market. What are the opinions of market participants like US major oil companies and independent refiners as well as US government on this issue? More specifically, what do they think about the current status and trends in US refining sector? And what do they think are the reasons behind the spike in oil prices? 13

14 Thanks! 14