Quarterly Trends Report

Q2 2020: Examining oil and gas trends in China

  • Multi Asset
  • Energy
  • Greater China

COVID-19 has sent shockwaves through the global energy industry. Many fuels faced demand collapse, but the repercussions for oil were particularly brutal. The West Texas Intermediate oil benchmark crept into negative prices in April and the price of Brent crude remains depressed, standing at about USD 43/barrel in mid-2020. Although natural gas was less severely impacted, it has still recorded major declines in some countries - with the International Energy Association expecting overall demand for 2020 to drop twice as much as it did following the 2008-09 global financial crisis. As the world’s second-largest oil consumer and third-biggest gas consumer, as well as a major producer of both, China has faced additional implications owing to coronavirus. Third Bridge Forum has conducted a range of Interviews on these topics, highlighting the challenges and opportunities.

With China’s global reach in the energy industry, what happens elsewhere is liable to affect domestic companies. After the financial crisis, many debt-laden governments removed restrictions on Chinese investment and, consequently, M&A activity picked-up. A manager at Canadian Rockies International Energy Co Ltd described this progression: “Chinese oil companies seized the opportunity and carried out a lot of large overseas oil asset M&A projects. In 2012, in particular, there was a surge… For example, CNOOC [China National Offshore Oil Corporation] acquired the Canada-based Nexen at nearly USD 20bn.”

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