Over two thirds of Chinese oil and gas executives expect profit growth in the industry this year bolstered by efficient cost management although crude prices remain low, DNV GL, a Norway-based maritime and energy consultancy, told Shanghai Daily today.
Around 67 percent of the executives in China are confident about the industry's growth, above the average of 63 percent globally and a jump from 23 percent in this country a year ago, DNV GL's survey covering 813 respondents worldwide showed.
"That's not because they expect crude price will surge, but because they are confident to make profits under low crude prices amid cost cuts," said Wu Yi, DNV GL's oil and gas regional business development manager for China, South Korea and Japan.
Oil and gas giants worldwide have cut 35 percent of running costs in 2015 on average after crude prices started to tumble in late 2014, followed by another cut of 25 percent in 2016, Wu said.
Chinese companies have also managed that "mainly by saving exploration costs," alongside measures such as layoffs and streamlining administrations, Wu said.
China National Offshore Oil Corp has managed to keep exploration costs at around per barrel in the north Bohai Sea region, "below the global average between and US per barrel for offshore fields."
Meanwhile the group has saved management costs by trimming administration procedures, such delegating decision-making rights to its branch offices in south China, he added.
While the World Bank and the U.S. Energy Information Administration predicted crude will average between and per barrel in 2018, most of the efficient oil and gas giants in China can make profits prices as low as -40 per barrel, DNV GL's survey showed.
"Especially the three largest companies," Wu said. "They can manage more efficient cost cuts thanks to larger scale."