On June 22, the World Energy Blue Book: World Energy Development Report (2019), published by the International Energy Security Research Center of Graduate School of Chinese Academy of Social Sciences and Social Science Literature Publishing House, was released in Beijing.
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I. Blue Paper’s social influence is becoming more and more prominent.
Blue Paper is divided into four parts: general report, market article, hot topic article and frontier discussion. The general report and the market report comprehensively reviewed the operation of the global energy market (oil, natural gas, coal, electricity and so on) in 2018, and prospected in 2019. The hot topics included the introduction and operation of China’s crude oil futures, geopolitical risks and China’s energy security, “one belt and one road” energy cooperation and policy recommendations, and The current situation and problems of the production, supply and marketing system of natural gas market, the policy of “coal to gas” and other hot issues are analyzed, while the frontier discussion section conducts in-depth research on the frontier topics of energy industry, such as research and development of energy storage technology and application, hydrogen fuel development, etc. We believe that the Blue Paper focuses on the global energy market and conducts in-depth analysis and Research on hot issues and cutting-edge topics. It has a high vision and a deep content. It has been published for seven consecutive years since 2013, and has had a wide and profound impact on the energy industry and academia.
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2. China has become the third largest crude oil futures market in the world
The Blue Book points out that since the birth of the Shanghai Futures Exchange’s “Renminbi Crude Oil Futures” in March 2018, trading volume has risen rapidly. At present, China has become the largest crude oil futures trading market in Asia and the third largest in the world, second only to the WTI crude oil market in the United States and the Brent crude oil market in the United Kingdom, and its international influence has gradually emerged.
We believe that with the expansion of China’s crude oil supply and demand gap in recent years and the high degree of external dependence year by year, the trend of crude oil prices has brought greater challenges to the smooth operation of China’s petroleum and chemical industries; the launch and smooth operation of China’s crude oil futures market not only provides a multi-level for China’s relevant enterprises. It also promotes the internationalization of RMB and provides a guarantee for the healthy and stable operation of China’s petroleum and chemical industries.
3. China’s Natural Gas Demand Continues to Grow Highly
The Blue Book points out that China’s natural gas consumption continues to grow rapidly, driven by policies such as “coal to gas” and “winning the battle to defend the blue sky”. The proportion of natural gas in primary energy in China has also increased steadily from 5% in the early period of the 12th Five-Year Plan to 7.5% in 2018. In the next 10 years, the proportion of natural gas in primary energy in China will increase from 7.5% in 2018. 5% rose to about 15%.
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We believe that natural gas, as a clean energy, will continue to maintain a rapid growth momentum under the background of the transformation and upgrading of China’s energy consumption structure. Driven by the gradual increase of urbanization rate, the gradual improvement of natural gas pipeline network layout and environmental governance, China’s natural gas demand will still be in the golden period of development, with huge potential for future development and incremental space. According to the forecast data of PetroChina Institute of Economics and Research, China’s natural gas demand will reach 620 billion square meters in 2035, of which 300 billion square meters are produced by itself, about 52% need to rely on imports.
III. Investment Suggestions
Sinopec, the leading domestic petroleum processing enterprise, will continue to be optimistic, as well as the wide range of energy sources focusing on natural gas business.
Risk cues. Oil price volatility risk, main product price decline risk, revenue less than expected risk, etc.