In 2019, the traditional energy industry experienced many changes and variables, and forge ahead in a round of policy and market shocks. The oil industry is still the foundation of the energy industry. Although compared with the peak value in 2018, the global oil production has declined this year, and the growth of shale oil in the United States has encountered a bottleneck, the magnitude of oil is still the focus of the energy industry and plays an irreplaceable role. In terms of natural gas, it is generally recognized as the most important growth point in the industry. Last year, the demand for natural gas was 4.6% The rapid growth rate, delivery of 3.14 million tons, and the growth trend has continued to 2019, which is due to the important transformation of global energy from coal-fired power; on the contrary, coal is relatively lost. In the process of global energy transformation, coal is becoming the biggest loser. In China, the coal industry is also experiencing unprecedented under the guidance of environmental protection and de capacity policies A painful period.
The following is a series of inventory made by the business club for the hot issues in the energy industry in 2019:
Oil chapter:
Crude oil:
In 2019, the international crude oil market surged. Against the background of Sino US trade war and the expected cooling of global economy, the “black swan” incident occurred frequently. From the macro Global Multi countries to the interest rate reduction channel, the currency crisis, the clouds and fog of Britain’s brexit, to the micro “OPEC +” production reduction, the geopolitical situation in the Middle East remained unresolved, from shale oil production in the United States And transportation bottlenecks, as well as frequent accidents in many refining facilities, etc., 2019 is destined to be an uneasy year for crude oil and even the whole bulk commodity field. Now our business club makes an inventory of many major events that dominate or affect the crude oil market in 2019:
1. China US trade negotiations have achieved phased results
China US trade negotiations lasted for two years. They talked about the suspension and finally reached the first phase agreement at the last moment of 2019, which reduced the uncertainty of the future of the market. At the press conference of the State Council Information Office on December 16, Fu Linghui, a spokesman of the National Bureau of Statistics, answered the question of reaching the first phase agreement in China US trade negotiations, adding that China and the United States currently It is the largest two countries in the world. The cooperation between China and the United States is a relatively good development for China, the United States and the world. It is of positive significance for enhancing market confidence, promoting economic and trade development, for China, the United States and even for the world.
2. British election brings new hope for brexit
On December 12, the Conservative Party led by Prime Minister Johnson won 364 seats in the British parliamentary election, occupying the majority of seats in the parliament. The Labour Party, the largest opposition party, lost out to 203 seats. After the election results, the conservative party gained a strong parliamentary basis to complete the brexit. Theresa May, the former prime minister, resigned because her leading brexit agreement could not be passed in Parliament. His successor, Boris Johnson, had to announce the election ahead of time because he wanted to promote the non agreement to leave Europe and was also vetoed by Parliament. It can be seen that the support of members of Parliament is the key to the successful brexit of Britain.
3. Many countries in the world enter into the channel of interest rate reduction, and monetary policy will become more and more difficult in the future
Since 2019, in order to cope with the decline of economic growth, more than 30 central banks have chosen to cut interest rates. However, many central banks are worried about the diminishing effect of low interest rates on stimulating the economy and the side effects of investment risks. By the end of the year, some central banks have closely observed the effect of early-stage policies in order to take the next step. As the Fed may end the rate cut process, the global central bank monetary policy may press the “pause” key in the future. But in the future, ultra-low interest rates may become a trend, and the pressure of economic growth will gradually increase.
4. Saudi oil facilities attacked
In the early morning of September 14, 2019 Beijing time, several drones attacked two oil facilities of Saudi Aramco and caused a fire. After the incident, the Hussein armed forces claimed responsibility for the attack, and many countries expressed or used strategic oil reserves to fill the supply gap. On the first trading day after Saudi Aramco’s attack, the oil market was not surprised by a huge earthquake. Brent crude oil jumped on the opening day of the 16th, with an increase of 17% at one time, breaking the $70 mark, the largest one-day increase since 1991; WTI crude oil also rose 13%. Although Saudi Arabia’s emergency recovery in the following week did not have a significant impact on the market supply, the incident shocked the global crude oil market seriously.
5. Saudi Aramco listed at the end of 2019
On December 11, Beijing time, Saudi Arabia National Oil Company (hereinafter referred to as Saudi Aramco) was listed on Riyadh stock exchange in Saudi Arabia. On the first day of trading, it rose 10% to 35.2 Riyals, hitting the limit. By the end of trading, Saudi Aramco’s market value on the first day had soared by 1.2 trillion yuan, with a total market value of 13.16 trillion yuan (about 1.88 trillion US dollars), officially surpassing apple（ 8112, – 74.00, – 0.90%) is the largest company with the largest market value in the world, equivalent to the market value of 3.5 Alibaba (US stock market value) or 9 Guizhou Moutai, only slightly lower than Brazil’s GDP (US $1.9 trillion) in 2018.
6. Oman sea tanker explosion
On June 13, 2019, Iran’s al Alam television network quoted local Omani sources as saying that due to malicious attacks, there were two tanker explosions in the Oman sea that morning. After the incident, the U.S. and Burmese oil prices rose rapidly, with Burmese oil rising more than 4% at one time and WTI crude oil rising nearly 4%. In addition, the attack led to panic in the market, through the Oman sea tanker premium also increased significantly.
7. Rocket attack on Basra, an oil production base in Iraq
On June 20, 2019, a rocket attack occurred near the residence of ExxonMobil company in Basra, an important oil production base in southern Iraq. After the incident, ExxonMobil urgently organized the evacuation of local staff, causing strong dissatisfaction from the Iraqi oil minister. Affected by this news, on the evening of the 20th, U.S. and Burmese oil continued to soar, while WTI crude oil rose to 6%.
8. Supply concerns caused by pollution of Russian oil pipeline in Druzhba
In the early morning of April 26, 2019 Beijing time, foreign media reported that the crude oil transported by the Russian Druzhba oil pipeline was polluted by organic chlorides, and Poland and Germany cut interest rates to suspend the import of Russian crude oil from the pipeline. It is reported that the contaminated crude oil can reach up to 1.5 million barrels per day, which exacerbates the market panic.
What are the variables in the international crude oil market in 2020 and where to go?
As the economy enters a cooling period, anti globalization has become a new challenge. The “black swan” event may occur more frequently in the next year. Geopolitical conflicts are still the strongest catalyst for “black swan”, while bulk commodities such as crude oil are the most affected varieties. However, the impact of “black swan” incident induced by geopolitical conflict on the crude oil market is short-term and phased. In the long run, it is necessary to consider the expectation of future economic cooling and the new progress of Sino US trade negotiations. At the micro level, it depends on the implementation of “OPEC +” production reduction and the growth level of shale oil production in the United States. On the macro level, we should pay attention to the monetary policy of the global central bank under the background of low interest rate, and focus on the monetary policy trend of the Federal Reserve.
Refined oil:
1. Refined oil value added tax lowered again
On March 20, the Ministry of finance, the State Administration of Taxation and the General Administration of Customs jointly issued the announcement on policies related to deepening the reform of value added tax, and decided to reduce the value-added tax rate of some industries from April 1. According to the announcement, the value-added tax rate of refined oil was reduced from 16% to 13%. Accordingly, the maximum retail price of domestic gasoline and diesel will be reduced by 225 yuan and 200 yuan per ton respectively, which will be implemented from 24:00 on March 31, 2019.
2. Transformation and upgrading of China’s refining industry
In May 2019, with the first phase of 20 million tons / year refining and chemical integration project of Hengli Petrochemical (600346, Guba), a private enterprise, located in Changxing Island, Dalian, Liaoning Province, being put into full operation, and the first batch of 40 million tons / year refining and chemical integration project (phase I) of Zhejiang Petrochemical Company, located in Zhoushan, Zhejiang Province, being put into operation, China’s private refining and chemical projects have officially leaped into the era of “ten million tons”, and the national refining and chemical industry has also been put into operation A new round of large-scale refining and chemical projects is coming into operation. In 2020, China Science and technology refining and chemical projects will be put into operation soon. With the expansion of Luoyang Petrochemical and Quanzhou petrochemical, the national refining capacity is expected to increase by 15 million tons / year, reaching the 900 million tons / year threshold.
3. Delayed implementation of national VI emission standard for automobiles
China’s six emission standards, which were originally to be implemented in some provinces and cities of China on January 1, 2019, were eventually postponed for six months to one year due to various reasons. Among them, Beijing will be postponed to January 1, 2020, while Shenzhen will be postponed to July 1, 2019.
4. Approval and decentralization of retail operation qualification of refined oil
In August, the general office of the State Council issued the opinions on accelerating the development of circulation and promoting commercial consumption, which clearly proposed to expand the market access of oil products, cancel the examination and approval of the qualification for wholesale and warehousing of oil products, and transfer the examination and approval of the qualification for retail operation of oil products to the local and municipal people’s governments. In combination with the opinions, Shandong Province took the lead in issuing relevant response rules, and on September 30, Shandong Provincial Department of Commerce issued the notice of Shandong Provincial Department of Commerce on matters related to the cancellation and decentralization of the authority for examination and approval of the operation qualification of petroleum products.
5. Support qualified private enterprises to participate in crude oil import and product oil export
On December 22, 2019, in the opinions of the CPC Central Committee and the State Council on creating a better development environment to support the reform and development of private enterprises, it was mentioned that the market access of private enterprises should be further liberalized. We will support private enterprises to enter the fields of oil and gas exploration and development, refining and sales, and build infrastructure for the storage and transportation of crude oil, natural gas and refined oil, as well as pipeline transportation. Support eligible enterprises to participate in crude oil import and product oil export.
Natural gas:
2019 is about to pass, and the natural gas industry is changing this year with ups and downs. Looking back to 2019, a lot of major events happened in the natural gas industry, such as the establishment of the state pipe network company and the ventilation of the natural gas pipeline (North Section) of the East China Russia line, which had a significant impact on the industry. Let’s review the major events in 2019.
1. China’s first deepwater self operated gas field started construction
According to the news on January 10, the semi submersible production platform of Lingshui 17-2 gas field development project, China’s first deep-water self operated gas field, has recently started construction at the Qingdao manufacturing site of offshore oil engineering. The gas field is expected to be put into production as soon as the end of the 13th five year plan, with an annual production of about 3 billion to 3.5 billion cubic meters of natural gas. This will effectively promote the development of deep-water oil and gas resources in the South China Sea, and is of great significance to the construction of the South China Sea atmospheric area and the protection of China’s energy security.
2. Circular of the development and Reform Commission on adjusting the price of natural gas benchmark stations
According to the information of the national development and Reform Commission on March 29, the national development and Reform Commission issued the notice on adjusting the price of natural gas base gate station, which decided to adjust the price of natural gas base gate station of each province (District, city) from April 1, 2019, with a minimum of 1030 yuan / thousand cubic meters (including 9% value-added tax). The combination of residential and non residential natural gas prices does not only mean the price increase, which is also the only way to reform the natural gas price in China, to ensure the healthy and orderly development of the natural gas market in China.
3. ExxonMobil signs a 20-year supply agreement with China
ExxonMobil, the world’s largest non-governmental oil and gas producer, announced recently that it had signed a 20-year LNG supply agreement with China’s Zhejiang energy group, with a contract volume of 1 million tons / year, CNN reported on April 23. It is reported that about 1.4 billion cubic meters of 1 million tons of liquefied natural gas will be vaporized, which is equivalent to the current one-year consumption of Zhejiang civil gas, and can meet the existing natural gas users in Zhejiang. As the world’s largest non-governmental oil and gas producer, ExxonMobil is the industry leader in many aspects of energy and petrochemical industry. The re entry of us natural gas into the Chinese market will undoubtedly squeeze Australia’s share in the Chinese natural gas market. Combined with Australia’s attitude towards Huawei issues or international decision-making, China’s purchase of us natural gas has more advantages than disadvantages in general.
4. Major changes in natural gas pricing
According to the news on June 14, in order to improve the utilization efficiency of oil and gas pipeline network facilities, promote the safe and stable supply of oil and gas, standardize the opening behavior of oil and gas pipeline network facilities, and safeguard the legitimate rights and interests of the operation enterprises and users of oil and gas pipeline network facilities, the national development and Reform Commission, the national energy administration and other four departments formulated the supervision measures for the fair opening of oil and gas pipeline network facilities, which was implemented on May 24. It is pointed out in the measures that after the opening of oil and gas pipeline network facilities, the calorific value quality of mixed transmission natural gas is different. Adopting energy measurement method is conducive to accurate measurement, fairness, reduction of settlement disputes, healthy development of natural gas industry and internationalization of China’s natural gas market. The implementation of energy measurement can ensure the accuracy of natural gas trade measurement to the greatest extent, reduce measurement trade disputes, and ensure the economic and social benefits of enterprises.
5. Increasing the exploration and development of oil and gas in China to ensure the national energy security
On July 8, PetroChina and Sinopec signed a joint research framework agreement on Tarim Basin, Junggar Basin and Sichuan Basin, involving 81 exploration rights and a total area of about 305800 square kilometers. On July 10, Sinopec and CNOOC (China) Co., Ltd., a subsidiary of CNOOC, signed a cooperation framework agreement on Bohai Bay, Beibu Bay, South Yellow Sea and Subei basin, involving 19 exploration rights of both sides and a total area of 26900 square kilometers. “Three barrels of oil” sign an agreement with each other, join hands with China’s oil and gas exploration, and allow foreign investment to enter China’s oil and gas exploration, which is conducive to promoting China’s oil and gas opening cooperation, increasing the intensity of oil and gas exploration and development, improving oil and gas exploration and development technology, and ensuring national energy security.
6. The attack on Saudi oil fields has reduced the supply of natural gas by about 2 billion cubic meters
According to foreign media reports, Saudi Aramco was attacked by drones at around 8 a.m. Beijing time on September 14, resulting in a sharp reduction of 5.7 million barrels of special oil per day, close to 6% of the global oil production. Saudi energy minister Abdulaziz said on the 15th that the explosion of facilities on the 14th also reduced Saudi Arabia’s natural gas supply by about 2 billion cubic meters, resulting in Saudi Arabia’s ethane and liquefied natural gas Supply will shrink by 50%. But he said domestic supplies of fuel and water and electricity had not been affected.
7. 100 billion square gas field discovered in Tarim Oilfield
On October 3, the well test of Bozi 9 of Tarim Oilfield Company of PetroChina was successful, with high-yield industrial oil and gas flow, 418200 cubic meters of natural gas and 115.15 cubic meters of condensate per day. It has become another one hundred billion cubic meters gas field found in the south of Tianshan in one year, marking the substantial progress of the construction of the second trillion cubic meters atmospheric area in Tarim Oilfield. This indicates that substantial progress has been made in the construction of the second trillion square meter atmospheric area in Tarim Oilfield. The breakthrough of well Bozi 9 will not only add “bottom gas” for the construction of 30 million tons of large oil and gas fields in Tarim Oilfield, but also add new gas sources for the gas transmission from west to East and the gas consumption in South Xinjiang, so as to further guarantee the domestic natural gas supply.
8. Crazy! LNG prices soared 23.7% in a single day
On October 30, the starting base price of Northwest feed gas auction was raised to 1.57 yuan / m3, and the final transaction price was 26-2.75 yuan / m3. The volume of registered orders in the auction was 100 million cubic meters, 80 million cubic meters less than that in the last time. Driven by the rising cost, the domestic LNG price rose sharply, nearly 1000 yuan rose overnight, and multiple terminals linked with the rise. The scope of this surge is almost national and large-scale, and it is also a large one-day increase in recent years. According to the data monitoring of the business association, the average price of LNG on October 30 was 3840 yuan / ton, and the average price on October 31 was 4750 yuan / ton, up nearly 1000 yuan per day, up 23.7%,
9. China Russia east gas pipeline (North Section) officially put into operation for ventilation
On December 2, the natural gas pipeline (North Section) of the China Russia east line was officially put into operation for ventilation. The natural gas pipeline of the China Russia east line will be interconnected with the existing regional gas transmission network, which can stably supply 38 billion cubic meters of clean and high-quality natural gas resources to the northeast, Bohai rim and Yangtze River Delta every year, effectively improving and alleviating the air pollution along the line. After the official acceptance of Russian gas, Northeast China and Beijing Tianjin Hebei region will benefit directly.
10. Establishment of national pipe network company
On December 9, the state oil and gas pipeline network Group Co., Ltd. (hereinafter referred to as “the state pipeline network company”) was established, which is a major measure to deepen the reform of the oil and gas industry and ensure the safe and stable supply of oil and gas. The national pipeline network company will build a “one network for the whole country” to realize the interconnection of long-distance oil and gas pipelines, better guarantee the national energy security, and promote the high-quality development of the oil and gas industry. It is a key step to deepen the reform of the oil and gas system in China, promote the formation of the “x + 1 + X” oil and gas market system, an important part of deepening the reform of the oil and gas system, and a very basic and key measure It is an important part of deepening the reform of oil and gas system, as well as a very basic and key measure, which can better guarantee the national energy security, promote the high-quality development of oil and gas industry and meet the people’s needs for a better life.
Coal chapter:
In 2019, affected by the environmental protection policy, the task of coal capacity reduction is urgent, the coal capacity is correspondingly compressed, and the demand continues to decline. In the context of supply side reform, the supply side of coal declines year after year, and the coal supply turns from surplus to tight. It is expected that in the future, with the continuous promotion of supply side reform, coal supply and demand will be basically stable through the coordination of domestic supply and import policies. Here are some hot spots in the coal industry reviewed by the business agency:
1. Increase of coking coal import in 2019
According to the latest statistics released by the customs, in November 2019, China’s coking coal import increased by 16% year on year to 6.18 million tons; the total coking coal import in the whole year was 72.8 million tons, up 17% year on year. In November, the import of anthracite was 440000 tons, down 49.5% year on year; the total import of anthracite was 7.06 million tons, down 18.6% year on year.
2. Coal industry capacity reduction
In 2019, the national energy system will focus on the major task of structural adjustment and take new steps in industrial transformation and upgrading. We will resolutely eliminate backward excess capacity, further promote structural coal capacity reduction, organize and implement classified disposal of coal mines with an annual output of less than 300000 tons, clarify tasks, policies and measures, close more than 450 backward coal mines, eliminate and shut down 20 million kilowatt coal-fired power units, and overfulfil the task of capacity reduction. At the same time, in 2019, we will continue to promote the release of high-quality coal production capacity, with an annual production capacity of 1.2 million tons and above reaching three quarters of the total production capacity, further concentrating on resource rich areas.
3. Strict environmental inspection policy
In 2019, the intensity of environmental protection inspection continued to increase, but the overall impact weakened. We will continue to control coal consumption in key regions. By 2020, the proportion of coal in primary energy consumption will be reduced to less than 58%. The total coal consumption of Beijing, Tianjin, Hebei, Shandong and Henan provinces (municipalities directly under the central government) decreased by 10% compared with that of 2015, the Yangtze River Delta decreased by 5%, and the Fenwei plain achieved negative growth.
4. Coal mine safety improvement & shut down the coal production capacity below 300000 tons in Guizhou
In December, the website of the State Administration of coal mine safety issued the notice of the State Administration of coal mine safety on carrying out the centralized rectification of coal mine safety (hereinafter referred to as the notice), and decided to carry out the centralized rectification of coal mine safety for three months from now on. “Notice” points out that the key contents of the centralized management of coal mine safety include production organized by super capacity, super strength and over designated personnel, production index issued by superior company to the coal mine, sudden and reckless in some areas with good coal storage conditions, safety coal pillars mined beyond the boundary or illegally and illegally, production concealed from the operation site by false drawings, false sealing, etc The coal mining method, equipment and process prohibited by the state such as roadway mining are adopted; the safety monitoring system is imperfect and operates abnormally; the underground illegal blasting and hot work are conducted, and the gas is operated beyond the limit; the hidden dangers such as fire area, high-rise area and goaf are not investigated and managed properly. Affected by the “12.17″ major coal and gas outburst accident in Guanglong coal mine, Anlong county, Guizhou Province, Guizhou Province has required the production of coal mines under 300000 tons per year to stop immediately.
5. Tightening of coal import policy
The policy of restricting the import of coal has always existed, and the national development and Reform Commission also said at the 2018 meeting that the import of coal in 2019 should not exceed 2018, but this year, affected by the high level of the price of power coal, if the import of coal is tightened on a large scale, it will further aggravate the rise of coal price. Therefore, the import of coal in 2019 has not decreased. At the end of the year, considering that most ports’ import coal quotas have been used up in 2019, some ports’ import coal policies have been tightened recently.
6. Coal electricity linkage mechanism
At the executive meeting of the State Council on September 26, 2019, it was decided, “seize the opportunity that the current market-oriented trading volume of coal-fired power generation accounts for about 50% and the price is significantly lower than the benchmark feed in price. For the coal-fired power generation volume that has not yet achieved the market-oriented Trading, from January 1, next year, the linkage mechanism of coal-fired power price will be cancelled, and the current benchmark feed in price mechanism will be changed into a market of” benchmark price + fluctuation up and down ” Mechanism “. “The vitality of the system lies in implementation”. We should seriously implement the new mechanism and attach great importance to the challenges faced by the new mechanism.
Conclusion:
In 2020, the continuation and tightening of policies, the expected slowdown in the growth of market consumption and other factors will bring about changes and uncertainties in the energy industry. New opportunities and challenges will inevitably accelerate the industry reshuffle. Facing the severe situation of the industry in the future, how to grasp the opportunities of the times and how to meet the challenges in the future are all the problems the industry is facing. 2020 may still be a relatively difficult year. At the same time, we hope that the energy industry will see the dawn of spring in 2020.
