The Oil Market Is Hit Hard By The New Crown Epidemic, And The Global Energy Transformation Is On The Way

On October 27, Huang Qifan, a distinguished professor of Fudan University and former mayor of Chongqing, said at the third CEW China Energy Week 2020 industry influence annual meeting that China should strive to develop China's oil and gas factor market well, and take it as the target for the next five and ten years.

He pointed out that in terms of energy, although China is the largest consumer of oil and natural gas in Asia, the Asian energy futures center and trading center are not in China, while in Singapore, this shows that China has not done a good job in the factor market. China has the advantages of population, industry and huge energy demand. It is natural to build an influential global energy trading center.

Huang Qifan said that if the factor market is poor, even if China becomes the world's largest GDP country, its influence on the world will still be limited. The reason why the United States has great influence is that, in addition to its strong military power, monetary power and high-tech, the more important factor is that the price of American factor market is the price of the whole world.

Huang Qifan believes that under the strategy of "taking the domestic large cycle as the main body and promoting the domestic and international dual circulation mutually", China must seriously solve the problem of high "export-oriented" energy supply in China. In recent years, China's external dependence on oil and gas has continued to rise. In 2019, the degree of external dependence on oil and gas has risen to 72.6% and 43% respectively, which has laid a huge security risk for China's energy supply guarantee.

Therefore, Huang Qifan suggested that shale gas should be developed more from the perspective of national security. "Shale gas in China can now reach 20 billion cubic meters. In the next five to ten years, if the price is low, we should add a zero on this basis to increase shale gas (production) to 200 billion cubic meters. Since 2000, the United States took 20 years to develop more than 300 billion cubic meters of shale gas and 200 million tons of shale oil last year. The United States has become an energy exporter from the world's largest energy importer. "

In its semi annual commodity market outlook report released on October 22, the world bank pointed out that crude oil prices plummeted at the beginning of the epidemic, and only partially recovered to the pre epidemic price level. -Xinhua News Agency

The epidemic will have a profound impact on the energy market

Fu Chengyu, former chairman of Sinopec, said at the meeting that today's world is experiencing a great change not seen in a century, and the new crown pneumonia epidemic has accelerated its evolution. After the outbreak, energy security will become a more important target for major economies, and the transformation of energy to green and low-carbon will accelerate.

Shao Yu, chief economist of Orient Securities, believes that the epidemic will profoundly change the society. "It is very likely that the black death in medieval Europe changed the historical process of Europe, and smallpox changed America. (New coronapneumonia epidemic) will bring fundamental and trend changes to the future of global economy and even human history.".

The International Monetary Fund (IMF) released the world economic outlook report on October 13, predicting that the global economy will shrink by 4.4% in 2020. Although it is expected to recover to 5.2% in 2021, it will gradually slow down to about 3.5% since then. Compared with the forecast before the outbreak, the cumulative loss of the global economy will increase from $11 trillion in 2020-2021 to $28 trillion in 2020-2025.

Shao Yu pointed out that in the field of energy, there are three trends worthy of close attention: first, the global economy is likely to grow at an average rate of zero in the next three years, of which China will maintain a growth rate of 3-4% for at least three years. Second, the "online" development of all walks of life will have a huge impact on the energy demand of the transportation industry, and this trend will continue. Third, globalization will undergo profound changes.

After the outbreak of the epidemic, central banks and governments have introduced unprecedented stimulus policies. According to IMF statistics, governments have provided about 12 trillion US dollars of financial support to families and enterprises. Although these measures have saved lives and livelihoods, their costs are high, and the recession caused by the crisis has led to a sharp drop in tax revenue. According to IMF estimates, global public debt will reach a record level of about 100% of GDP by 2020.

"The supply of liquidity this time is almost unlimited, and in the past two quarters, we have supplied more liquidity than the last decade combined." Shao Yu said. Why didn't adequate liquidity lead to a commodity boom? Shao Yu pointed out that in the past, the stimulus measures were mainly aimed at investment, but now they are aimed at consumption, "the energy pulling commodities is not at the same level".

In the semi annual commodity market outlook report released by the world bank on October 22, the world bank pointed out that crude oil prices plummeted in the early stage of the epidemic, and only partially recovered to the price level before the outbreak. Oil demand may be affected by the new pneumonia epidemic. The bank expects crude oil prices to average $44 a barrel in 2021, up from $41 a barrel in 2020.

According to sun Xiansheng, Secretary General of the International Energy Forum, the impact of the epidemic in the energy field includes accelerating the formation of a new geopolitical pattern. "The focus of oil and gas production is constantly shifting from east to west, while the focus of consumption is constantly shifting from west to East. About 60% of energy demand is in the Asia Pacific region. In the process of this transformation, the focus of geopolitical contradictions also shifts. In the past, the main contradiction was elsewhere. Now, the United States will increase its pressure on China. "

"Reverse the energy transition" of all countries

In September, China announced at the UN General Assembly that it would enhance its national independent contribution, adopt more effective policies and measures, strive to reach its peak by 2030 and achieve carbon neutrality by 2060. This is the first time that China has put forward the goal of "carbon neutrality", and it is also a long-term policy signal for China's low-carbon economic transformation.

At the meeting, senior adviser to the director general of the International Energy Agency, Mr. an Fengquan, said that the emission reduction targets just announced by China highlight China's responsibility as a big country. "It's a very ambitious goal, but it's going to take a lot of effort to achieve it."

He pointed out that China is still a developing country, and carbon emissions may continue to grow for some time. At present, China's coal consumption has accounted for half of the world's total consumption, and its coal installed capacity also accounts for half of the world's total. In such a large amount of high carbon consumption, it is difficult to achieve carbon neutrality in 2060. China must realize the arduous task of carbon neutralization at twice the speed of developed countries.

Zhu Xian, vice president and chief operating officer of the New Development Bank (hereinafter referred to as "the new development bank"), said at the meeting that China's carbon neutral target has greatly boosted the confidence and determination of global emission reduction, and at the same time, it will also form adverse pressure on China's energy industry. It is reported that since its establishment, CDB has been committed to helping BRICs countries promote the development of clean energy and new energy. The bank's first project is distributed photovoltaic power generation in Shanghai, followed by offshore wind power projects in Fujian and Guangdong.

Talking about the development prospects of new energy, Zhu Xian believes that although the production and scientific research costs of new energy have been declining in recent years and have entered the stage of market competition, the price is still controlled to a large extent, and there are considerable state subsidies in the pricing process. If we want to make new energy more market-oriented, we must make the pricing process more transparent.

In this regard, in view of the increasing dependence of China's oil and gas on foreign countries, Zhu Xian pointed out that if the import of oil and gas resources is reduced for the sake of national energy security, then it is necessary to consider how to apportion and digest the spillover costs from the perspective of investors, rather than pricing by the state, which itself is divorced from the international market. In addition, how to support the development of new energy from the perspective of capital market is also the key.

"For example, we have now made two new energy projects, one is offshore wind power, the other is photovoltaic. However, due to the changes in the pricing policy of the state, the project units or investors rebound on the incentive mechanism and reconsider the project itself. " Zhu stressed that in order to promote the development of clean energy, the state should adopt medium - and long-term, transparent and even neutral support as far as possible, rather than one case by one discussion, which will send a puzzling market signal. " He said.

On the energy transformation of emerging market countries, Zhu Xian pointed out that four of the BRICs countries are coal producing countries. Only Brazil's energy industry used to rely on hydropower and now relies more on new energy. From a medium and long-term perspective, BRICs countries must take the clean energy route, that is, "de coal". However, it is intolerable to push forward this process too fast and too much. For example, India is short of oil and gas, and only has coal. However, the country is now in the stage of industrialization and has a huge demand for electricity. If only clean energy is developed, the cost will be unbearable for ordinary enterprises and ordinary people.

"Most of the multilateral financial institutions have now suggested that we no longer finance coal projects, which may be right from a climate change perspective. But for some countries, it will have a negative impact on their development potential, so the final question is how to balance it. " Zhu Xian said.