• 6 minutes Trump vs. MbS
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes WTI @ $75.75, headed for $64 - 67
  • 51 mins Satellite Moons to Replace Streetlamps?!
  • 20 hours US top CEO's are spending their own money on the midterm elections
  • 35 mins EU to Splash Billions on Battery Factories
  • 6 hours U.S. Shale Oil Debt: Deep the Denial
  • 7 hours The Balkans Are Coming Apart at the Seams Again
  • 22 hours OPEC Is Struggling To Deliver On Increased Output Pledge
  • 7 hours The Dirt on Clean Electric Cars
  • 18 hours Uber IPO Proposals Value Company at $120 Billion
  • 8 hours 47 Oil & Gas Projects Expected to Start in SE Asia between 2018 & 2025
  • 20 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 1 day Petrol versus EV
  • 23 hours U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 1 day 10 Incredible Facts about U.S. LNG
U.S. And Europe Divided On The Future Of Oil

U.S. And Europe Divided On The Future Of Oil

Oil majors in Europe and…

Elon Musk Plans First Commercial Flights To Mars

Elon Musk Plans First Commercial Flights To Mars

Despite the headwinds he faced…

James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

Chinese Oil Major Sees Itself Forced To Shut Down Oil Fields

China’s oil major Sinopec has responded to the disappointing results of yesterday’s Doha meeting by announcing the temporary closure of four oil fields that have been in production for over 50 years.

Sinopec (China Petroleum & Chemical), the second-largest producer in China and the largest refiner in Asia, will temporarily shut down four oil production projects after Saudi Arabia, Venezuela, Russia and Qatar said they would pursue an anti-climactic freeze on output to January levels.

From the Chinese oil major’s perspective, the freeze to January levels—which still requires agreement from other producers—is not enough to sustain some operations.

Related: OPEC Ups Pressure On Iraq, Iran To Freeze Production

The four sites slated for closure are in the Shengli oilfield in Shandong province, which Sinopec says are among the poorest performers.

With average production costs in China running between $40-$60 per barrel, state-backed producers are suffering major losses, including PetroChina (the largest) and CNOOC.

“At current oil prices, the shutdown could save 130 million yuan (HK$155 million) of costs and reduce losses by 200 million yuan,” the company said on its website.

Related: Oil Production Rumor Mill Continues To Turn As Iran Hints At Freeze

In 2015, Sinopec’s profits declined more than 50 percent, and oil production is expected to further decline this year, by around 2 percent.

Analysts expect an even greater decline.

“Sinopec has been maintaining output in its aging oil fields by over-investing and this is no longer possible in the current oil price environment,” Bloomberg cited Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, as saying.

Beveridge estimates that Sinopec needs oil to stay above $50 a barrel to break even, and that its domestic production will drop 5-10 percent this year.

For China’s major oil companies, the price slump could lead to sweeping reforms that see them lose exploration licenses to private companies.

By James Burgess of Oilprice.com

More Top Reads From Oilprice.com:


x

Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News