China Oil & Gas Projects Unlikely to Be Delayed

Amidst project delays across Asia, China could prove to be the big exception

With coronavirus (Covid-19) being declared a global pandemic by the World Health Organisation (WHO) and the oil price war resulting from the OPEC+ disagreement, the oil and gas industry in Asia is facing an unprecedented uncertainty. Companies are being forced to rethink the ongoing project timelines and ‘projects in the pipeline’ for 2020. Projects expected to take final investment decision (FID) this year are at elevated risk of deferral, says GlobalData, a leading data and analytics company.

But China could be an exception. The country, which was the center of the Covid-19 outbreak earlier this year, will see the planned projects progress as the country recovers from the worst of the coronavirus, though minor delays may still occur. Domestic developments will be prioritized over international investment for China National Offshore Oil Corporation (CNOOC), after its recent capex review to trim the annual budget by 10-15%.

China Petroleum & Chemical Corporation (Sinopec) marginally cut its capex by 2.5%, which will come predominantly from its refining business and sales sector. To date, there are no confirmed budget cuts from China National Petroleum Corporation (CNPC); however, it has announced an adjustment of 2020 production and operational plans in accordance to market trends.