OIL & GAS WEAKNESS
SHANGHAIDAILY - More than three quarters of Chinese oil and gas executives do not expect profit growth in the industry this year amid an ongoing restructuring in state-owned giants and low oil prices denting the industry, a survey showed yesterday.
Only 23 percent of the executives expect profit growth in the industry, a sharp drop from 61 percent last year and also below the global average of 32 percent, DNV GL, a Norwegian maritime and energy consultant, found in the survey.
The survey covered 723 respondents globally, with 31 of them selected from China's oil and gas giants such as Sinopec and China National Petroleum Corp, the country's biggest oil and gas producer.
The executives predicted slower growth as "they forecast oil prices to take a long time to rebound to US$70 per barrel," the point at which prices started to plunge two years ago, said Wu Yi, DNV's business development manager for China, South Korea and Japan.
Over 87 percent of the Chinese oil and gas executives would resort to cost cutting to survive the slowdown, according to DNV's survey, up from last year's 75 percent.
Last month, CNPC predicted a 70-80 percent plunge in its net profit last year from 2015. The company blamed low oil prices, which "dragged down profits globally."
China National Offshore Oil Corp suffered a 15.2 percent drop in its oil and gas sales in the third quarter of last year from a year earlier.
The dismal picture has forced domestic oil and gas companies to implement layoffs and salary cuts in a bid to enhance their competitiveness.
In December, CNPC announced a cut of 20 percent of its administrative employees to streamline its organization and boost efficiency.
CNOOC "would cut its operational costs in the Bohai area this year," Wu said, quoting a CNOOC employee familiar with the issue.
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