Divergent Segment Performance in China’s Oil and Gas Sector

Fitch Ratings-Hong Kong/Shanghai-25 August 2021: China’s oil and gas industry saw a growth recovery in upstream production, rebounding refining utilisation and a fast rise in gas consumption and imports during 1H21. The oil price rally will support upstream operations’ revenue and profitability, but press refining and gas margins in 2H21, says Fitch Ratings. Fitch expects national oil companies’ (NOC) 2H21 production to stay steady on higher upstream capex and segment profitability, which should improve with higher volume and prices. China’s gas production rose by 11.1% yoy during 1H21, while oil production was up by 2.2% yoy, as NOCs accelerated exploration and production.