Oil companies around the world are gritting their teeth as the ongoing slump in crude prices cuts into their profits, but Chinese national oil firms may be immune to the energy rout, new reports suggest.
China's three major national oil companies - China National Petroleum Corporation (CNPC), Sinopec and China National Offshore Oil Corporation (CNOOC) - all of which have upstream and downstream operations, will be resilient to oil declines, Moody's said in a report this week.
Crude's 50 percent plunge since June will hurt profits in exploration and production (E&P), Moody's said, noting cash margin per barrel is expected to halve to $32-$39 from $65-$73 in 2013 if Brent prices remain at $55. However, business diversity, strong liquidity cushions and conservative capital spending practices will help cushion the blow from profit losses, it said.
Chinese state-owned energy firms have already joined their global peers in slashing capital spending. On Tuesday, CNOOC announced it will cut expenditure up to a maximum of 35 percent this year. PetroChina and Sinopec are widely expected to follow suit when they release annual earnings next month.
Gero Farruggio, head of APAC upstream research at Wood Mackenzie, also voiced a positive outlook: "Even with challenges, we expect an eventful year with several positive developments on the political and fiscal front. These will not only act to soften the blow but renew interest in upstream exploration in the [Asian] region," he said in a note.