{"id":1882,"date":"2020-04-14T14:05:50","date_gmt":"2020-04-14T20:05:50","guid":{"rendered":"http:\/\/accesstomexico.mx\/blog\/?p=1882"},"modified":"2020-04-16T14:16:19","modified_gmt":"2020-04-16T20:16:19","slug":"china-should-follow-mexicos-oil-hedging-strategy-says-cnpc-researcher","status":"publish","type":"post","link":"https:\/\/accesstomexico.mx\/blog\/china-should-follow-mexicos-oil-hedging-strategy-says-cnpc-researcher\/","title":{"rendered":"China should follow Mexico\u2019s oil hedging strategy, says CNPC researcher."},"content":{"rendered":"\n
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WORLD OIL<\/a> <\/p>\n\n\n\n

A researcher at China\u2019s biggest oil company said the country\u2019s drillers should copy the hedging strategies of Mexico and shale firms in the U.S., which use financial derivatives to protect against falling oil prices.<\/p>\n\n\n\n

Most of China\u2019s oil production is unhedged, leaving the stability of the sector exposed to global market fluctuations, according to Dai Jiaquan, director of the oil market research department at China National Petroleum Corp.\u2019s Economics & Technology Research Institute.<\/p>\n\n\n\n

Chinese firms should use derivatives to ensure stable returns on the crude they sell, Dai said in a panel interview published in CNPC-owned China Petroleum Daily. The process is easier with yuan-denominated futures on Shanghai International Energy Exchange, he said.<\/p>\n\n\n\n

\u201cNow that Shanghai crude oil futures are listed and functioning well, it is necessary to make full use of financial means to hedge the risk of price fluctuations,\u201d he said.<\/p>\n\n\n\n

Oil prices are down by about half so far this year, straining the finances of China\u2019s state oil firms, which have all decided to trim spending. Despite the billions of dollars annually they pour into old, high-cost fields to keep China\u2019s reliance on overseas oil in check, the country has still grown to become the world\u2019s largest importer.<\/p>\n\n\n\n

Derivatives could also help China\u2019s government take advantage of lower prices to build its strategic reserves, Bai Ming, deputy director of the Ministry of Commerce\u2019s international market research institute, said in the same panel interview.<\/p>\n\n\n\n

\u201cIf we want to expand our reserves, on the one hand, we can buy real oil, and on the other hand, we must purchase futures to lock in low-cost sources in advance,\u201d he said.<\/p>\n\n\n\n

CNPC declined to comment. Nobody answered calls to the country\u2019s other two big state oil firms — China Petrochemical Corp., known as Sinopec, and China National Offshore Oil Corp. The listed units of all three firms didn\u2019t immediately respond to requests for comment.<\/p>\n\n\n\n

The use of energy derivatives by Chinese firms has come under government scrutiny after Sinopec\u2019s trading arm suffered an operating loss of nearly $700 million in 2018, which it blamed on \u201cinappropriate hedging techniques\u201d and \u201cmisjudgment\u201d of prices. In January, the state asset regulator tightened rules on commodities derivatives trading, capping hedging at 80% of physical volume, down from 90%. It also reiterated that derivatives trading should be purely for the purpose of hedging, rather than speculation.<\/p>\n\n\n\n

Mexico\u2019s hedging program, which includes using put options to set a price floor, has shielded it during every downturn over the last 20 years. It made $5.1 billion when prices crashed in 2009 during the global financial crisis, and it received $6.4 billion in 2015 and another $2.7 billion in 2016 as Saudi Arabia flooded the market.<\/p>\n\n\n\n

China produced about 3.8 million barrels a day of crude oil in 2018, compared to almost 2.1 million daily by Mexico, according to data from the BP Statistical Review of World Energy. Virtually all of China\u2019s output is consumed domestically. Mexico has in the past hedged around 250 million barrels, or about 680,000 barrels a day, which is equal to nearly all its net oil exports.<\/p>\n\n\n\n

\ufeffStaff World Oil, (2020), China should follow Mexico\u2019s oil hedging strategy, says CNPC researcher, EE.UU., World Oil, Recuperado de <\/strong><\/p>\n\n\n\n

http:\/\/www.worldoil.com\/news\/2020\/4\/14\/china-should-follow-mexico-s-oil-hedging-strategy-says-cnpc-researcher<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

WORLD OIL A researcher at China\u2019s biggest oil company said the country\u2019s drillers should copy the hedging strategies of Mexico and shale firms in the U.S., which use financial derivatives to protect against falling oil prices. Most of China\u2019s oil […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1882","post","type-post","status-publish","format-standard","hentry","category-uncategorized","clearfix"],"_links":{"self":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/1882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/comments?post=1882"}],"version-history":[{"count":1,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/1882\/revisions"}],"predecessor-version":[{"id":1884,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/1882\/revisions\/1884"}],"wp:attachment":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/media?parent=1882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/categories?post=1882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/tags?post=1882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}