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This is a feature from “uåX˜äŠÊ˜·³Ç's August 2021 Insight Report. Click here to read the full edition

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The investment strategies of Chinese oil companies, all of which are owned by the state, are expected to align with president Xi Jinping’s targets of reaching climate neutrality by 2060 and peak carbon-dioxide emissions by 2030.

According to S&P Global Platts Analytics, “China’s major utilities have been aggressively investing in renewables, notably wind, even before the carbon neutrality target was announced, essentially aiding portfolio diversification”.

A decline in wind curtailments, which afflicted China for years, suggests that renewables integration can be successful, providing additional stimulus for investments.

In the shorter term, Chinese oil majors are guided by the 14th five-year plan, covering the period up to 2025, which targets an 18% reduction in China’s CO2 per unit of GDP, a 20% share for non-fossil energy in total energy consumption, and the construction of “large-scale clean energy bases”.

China National Offshore Oil Corporation (CNOOC) intends to reduce its CO2 emissions by 1.5 million tonnes between 2021 and 2025, in line with government targets. By 2025, it plans to invest about 5% of annual capital expenditure, amounting to around €13 billion, in “new energy”, with a focus on offshore wind.

CNOOC made an early foray into offshore wind by installing a 1.5MW turbine on the Suizhong 36-1 oil field, in the Bohai Bay, in 2007. But its first large-scale offshore wind power project was the 300MW Zhugensha H2, located off Jiangsu, in the East China Sea. It achieved first power in September 2020 and is now fully commissioned.

A 1GW offshore wind project is planned off Shantou, Guangdong province, in the South China Sea, and is expected online in 2027.

n its 2021 strategy preview, CNOOC says it plans to invest significantly in research around offshore wind, geothermal energy and “other new energy fields” to “facilitate the company’s energy transition”.
The company’s priority in the short term, however, remains a switch to gas, with its share set to increase from 21% of the company’s production in 2021 to 30% in 2025.

Pre-empting targets

PetroChina, owned by China National Petroleum Corporation (CNPC), is the country’s largest oil group by assets with an annual Capex of more than €30 billion. The company intends to achieve near-zero emissions by 2050 and peak CO2 by around 2025, earlier than national targets.

PetroChina has recognised that, with the energy transition, “demand for major oil products peaked ahead of schedule”. Its stated vision is to have “fossil fuels and clean energy… fully developed in an integrated manner”.

The company aims to develop geothermal, solar, wind and hydrogen energy, alongside the supply of natural gas. It will also establish an investment fund to support the growth of new energy sources.
According to information held by “uåX˜äŠÊ˜·³Ç’s research and data division, “uåX˜äŠÊ˜·³Ç Intelligence, CNPC currently has 600MW of offshore wind capacity under development in Guanyun and Rudong, off Jiangsu Province, due to come online in 2024.

Sinopec is China’s largest supplier of oil and petrochemical products, and second largest oil and gas producer, with Capex of nearly €22 billion for 2021. It aims to achieve carbon neutrality by 2050 and has said it will focus primarily on hydrogen. Sinopec has not disclosed plans for wind farms in China.