Chinese oil giants were not immune to the ravaging nature of the COVID-19 pandemic that decimated oil demand the world over, with CNOOC Ltd reporting a 59% drop in profits for 2020.
CNOOC, the China National Offshore Oil Corp., posted net profits of 24.96 billion yuan (around $3.82 billion), according to Reuters, citing the company’s Hong Kong Stock Exchange filing, and revenue of 155.37 billion yuan. In 2019, CNOOC posted 61.05 billion yuan in net profit.
A 59% plunge in profits sounds ominous, but it was still in line with analyst expectations, and the company also noted that reserves and production hit record highs, while costs decreased to 10-year lows.
“In 2020, all-in cost decreased to US$26.34 per BOE, down 11.6% year-over-year (YoY), hitting a 10-year low, and operating cost was US$6.90 per BOE, down 6.7% YoY, hitting a 13-year low, which continued to consolidate the cost competitiveness of the Company and demonstrated the excellent management and execution capacity of the management,” CNOOC said in a press release.
Despite the more upbeat talk of lower operating costs, CNOOC isn’t looking forward to a stellar 2021 and warned of tough times ahead still, saying, “The Covid-19 pandemic has not been completely controlled,” and CNOOC continues to face “tremendous pressure in the capital market.”
CNOOC is eyeing a major uptick in drilling this year, despite the fact that home-grown demand for crude is reaching a peak. According to CNOOC’s outgoing president, Duan Liangwei, consumption will peak and then start to decline in the next decade.
These drilling and spending on drilling ambitions are being driven by Beijing’s desire to reduce dependence on foreign suppliers, with Chinese President Xi Jinping focusing heavily on energy security. CNOOC is not alone in this. PetroChina also plans to spend $37 billion in 2021.