Global Energy Outlook for Sinopec Corp. (Chinese NOC)

Global Energy Outlook for Sinopec Corporation (Your name) (Course instructor) (Course title) (Date of submission)
 Company Overview Sinopec Corporation or China Petroleum Corporation is a petro chemical organization that was established in 1998. The government of China, which holds most of its shares, owns the company. The capital of this Corporation which has an estimated capital of RMB 182 billion is placed at Beijing. The company utilizes its investor’s rights on related government assets that are owned by its own subsidiaries, share holding companies as well as other controlling firms. Some of the company’s rights include decision-making processes, receiving returns on its assets, and appointment of management workforce. The company operates, supervises and manages state assets in accordance to specific laws of the land. In addition, it also shoulders the resultant responsibility of upholding and increasing the state asset’s value. The main activities and operations of this entity include exploration, industrial investment and the management of investments, transportation and storage of oil products, production, comprehensive use of gas and oil products, marketing aspects, designing, construction and installation of petrochemical and petroleum equipments, and oil refining. Other activities include research, application and consulting devices of technology, import and export of commodities and manufacturing of mechanical and electrical equipments (SINOPEC, 2012). Sinopec is presently listed in both domestic and international stock exchange with midstream, downstream and upstream operations involving oil and petroleum products. At its inception back in 2000, the Corporation issued more than 17 billion shares in New York, Hong Kong and London stock exchanges. At the end of that year, the total number of shares in the company was 87 billion, 76% of which were held by Sinopec group. China Petroleum Corporation or Sinopec is the largest supplier and producer of refined oil products in China. It is also a major operator in petrochemical products such as, synthetic fiber monomers, synthetic resin, polymers, synthetic rubber, chemical fertilizers as well as other intermediates. Moreover, it is considered the largest crude oil producer in China. Oil Exploration & Production The company’s oil and gas exploration prospects are mainly located in South, west and East of China. In the year 2012, the company had acquired more than 300 licenses for exploration prospects in several parts of the country. These prospects covered more than 966,800 km2. There are a total of 12 subsidiaries in its gas and oil production including Northwest Company, Shengli Oilfield Company, Zhongyuan Oilfield Company, Henan Oilfield Company, Southwest Oil & Gas Company, North China Company, Jianghan Oilfield Company, China East Company, Shanghai gas and Oil Company, and Exploration Southern Company. In the year 2012, the company generated a substantive achievement on its gas and oil prospects. There was breakthrough with regard to innovations, innovative oil resources and a success in dealing with technical issues in its operations. During this year, there was an increment of oil and gas reserves by 410.73 MMboe. Oil reserves that could be recovered were 280.92 MMbbl, while natural gas reserves that could be recovered were 778.82 bcf. With regard to development, the company was also successive in the management of its oil fields. Moreover, research on technology and development were also enhanced with a focus of increasing oil and gas reserves as well as recovery. The 2011 production of natural gas and crude oil were 516.94 bcf and 321.73 MMbbl respectively. Among all subsidiaries, Shengli Oil reserve is the largest oil producer and produced a total of 194.11 during that year. Reserves that could be recovered were 3966.21 MMbbl. Among these were natural gas at 6708.68 bcf and crude oil at 2848.1 MMbbl. The company has a team of technical staff in gas and oil production. The technical operation in oil production includes oil recovery systems, 3D seismic technique, fast and optimum drilling, complex structure drilling and multistage drilling. Table 1.1 Exploration and production rate from 2009 to 2010 201120102009Change from 2010 to 2011(%)Production of Crude Oil (MMbbl)322.73327.84327.61（1.9） China 302.37 302.17 301.15 0.4          Africa 18.35 25.67 26.46 （28.5） Production of Natural Gas (bcf) 517.17 441.39 299.02 17.1 Production of Gas and Oil (MM boe) 407,88 401.42 377.44 1.6 Proved Crude Oil Reserves (MMbbl) 2846 2,887 2,921 （1.4） Proved Natural Gas Reserves (bcf) 6708 6,446 6,738 4.1 Proved Oil & Gas Reserves (MM boe) 3965 3,962 4,044 0.1 Corporate Culture In maintaining the company’s heritage and culture of the oil and gas industry, the company has showcased the effectiveness of a modern management both at home and in international perspectives. The management has endeavored to cultivate a culture that is positive, hardworking, harmonious, dedicated, devoted and active among its employees. This has strengthened the spiritual momentum and development of the corporation (Chengyu, 2011). After conducting extensive studies, the company promulgated in 2010 an organizational culture that emphasized the corporation’s main principles. This was also with regard to the attitude of company development, building the country, creation of value to shareholders, benefiting the company’s workers and value creation for shareholders. Ever since this time, the company has been facilitating and implementing the outline of its corporate culture in a multifaceted technique. Combining its management concept and its features, the entire organization has established a cultural perspective that could be adapted to the health development of the present corporate system. Integration of the value concept in its management systems has resulted into the company to be recognized as a global entity. Sinopec Corporation has established and adopted structure of corporate governance that is standardized. In addition, it is management and decision-making process is centralized. The management is delegated responsibilities at various levels and its business activities are handled by business departments that are specialized. Environmental and Safety Record Similar to other exploration companies, Sinopec has not been spared criticisms regarding what is considered as its damaging aspects of its exploration processes. For instance, the management at a Wildlife Conservancy Society in Gabon criticized Sinopec’s use of heavy machinery and dynamite in the exploration process of prospected oil at Loango National Park. The management of the conservancy argued that the operation would drive away wild animals to other places of the jungle where they will be exposed to poachers. The conservationists claimed that Sinopec could employ other exploration techniques such as horizontal drilling to curb huge environmental impact. As a result, the Council of National Parks suspended Sinopec’s operations in this country. However, the company reassessed its environmental conduct in 2007 with other environmentalist in Gabon, and Global Wildlife Foundation. This time, the company was highly accredited on its environmental policies from Chinese environmental experts, western and Gabonese government. This mandated the government to grant the company permission to resume oil exploration operations in the country (Chris, 2010). In 2006, there was a leakage of gas in a drilling test conducted by Sinopec branch in Quingxi. This leakage led to more than 12,380 individuals being evacuated from the area. It took the company more than two weeks and three attempts to eventually seal the leak. Owing to environmental and river pollutions, various environmental watchdogs in China warned the company in 2007 to stop some of the operations since someof them had adversely impacted and polluted the environment. In addition, some of the exploration prospects had completely violated the requirements in water treatment. This mandated the government to institute pollution fines in its activities (Sinopec, 2012) Presently, the company’s scientific outlook concerning its operations has been concerned on putting people first. It has come to consider health and life at the core of its operations. This is particularly exhibited by the company’s integration of HSE management as putting as the aspect of considering people first. The company has combined the aspect occupational health, environmental protection and safety measures. Operations Sinopec procurement division manages procurement, purchasing and supply systems of the company. This department undertakes the functions in centralized purchasing, procurement management and international marketing. It is mandated to procure main materials for company operations, equipments, and operation of import and export materials. In 2012, the company’s procurement division achieved a turnover of RMB 170.6 billion in purchases as well as a total of USD 2.73 billion in export and imports of chemical and refined products, equipments and other materials. Sinopec Procurement Department has a worldwide marketing network. Some of its China subsidiaries are located in Shanghai, Beijing, Tianjin, Nanjing, Chongqing, Wuhan, Dalian, and Zhanjiang. It also has a number of subsidiaries abroad in countries such as Japan, US, Russia, Germany, Venezula, UAE, Kazakhstan, Singapore, Nigeria, Brazil and Saudi Arabia. The company also utilizes the e-commerce web, which happens to be its largest procurement platform. The yearly transaction volume in its e-commerce platform is 250 billion. There are approximately 15,000 suppliers and 1,180,000 materials categories. The e-plat form facilitates the prospect of competitive bidding, ask and put, tendering, transparency, openness and process control (Sinopec, 2012). Research and Development Sinopec puts more emphasis on the needs of the market. As such, it greatly considers the aspect of research on enhanced production, pursuance of high value and differentiated products. Some of the products that have been successfully developed through extensive research include but not limited to: the special lubricant which is applied in Shenzhou” and Chang’e-1 satellites. Ther...