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Oil & Gas: Price, capacity issues erode category value

Prospects improve later in the year

 

The 7 percent decline in the oil and gas category followed two successive annual declines of 6 percent and 15 percent, as the global crude oil price slump continued to pressure the category, which last rose in value in 2015, by 4 percent.

 

In addition, Sinopec and PetroChina, the two state-owned oil companies ranked in the BrandZ™ China Top 100, contended with overcapacity and competition from independent refineries that have appeared with liberalization of the oil and gas sector.

 

The state-owned companies improved their financial performance late in 2017, however,

because of a combination of rising crude oil prices, better cost controls, and rising domestic consumption in a strengthening economy.

 

Sinopec, which primarily focuses on refining, experienced rising demand for petroleum products like gasoline and kerosene. PetroChina, a major producer of natural gas, benefited from the government’s efforts to abate air pollution with limits on burning coal. Demand for liquid natural gas (LNG) increased dramatically.

 

Prospects for the oil and gas State Owned Enterprises (SOEs) look promising, as the global price of crude oil strengthens. However, based on circumstances early in the year, Sinopec declined 14 percent in value, and PetroChina increased only 1 percent. Only one other category, telecom providers, declined in value more than oil and gas in the 2018 BrandZ™ China Top 100.