Oil and Gas- Value dips modestly after years of decline
Oil and Gas: Value dips modestly after years of decline
Weaker yuan increases importing costs
The oil and gas category decreased 1 percent in value following a 7 percent decline a year ago. Both of the state-owned brands ranked in the BrandZ™ China Top 100 experienced only modest change in value, with Sinopec remaining flat and PetroChina down 2 percent.
The drop in global oil prices and stock market weakness drove the results, although profitability improved late in the year, because of strengthening global oil prices and surging local demand.
China surpassed the US as the world’s leading importer of crude oil. To satisfy that demand, Sinopec and PetroChina entered into agreements with overseas oil companies, primarily from the Middle East. These strategic arrangements are part of China’s Belt and Road Initiative.
Although Chinese consumption of oil and natural gas, and the transition away from coal to cleaner fuels, drives business for oil and gas companies worldwide, the weakened Yuan makes importing more expensive for the Chinese companies.