SWOT Analysis of Foreign Direct Investment of China Petroleum Enterprises

Fine Positioning of International Coordinates —— SWOT Analysis of China Petroleum Enterprises' Transnational Operation Strategy

In 2004, crude oil imports exceeded 654.38 billion tons for the first time, and the dependence of oil on foreign countries approached 40%. In recent years, as the main implementers of China's petroleum security strategy, although the three major oil companies-China Petroleum and Natural Gas Group (hereinafter referred to as "China Petroleum"/PetroChina), China Petrochemical Group (hereinafter referred to as "Sinopec"/Sinopec) and China Offshore Oil Corporation (hereinafter referred to as "China Offshore Oil"/CNOOC) have made many achievements in their international operations, their "going out" road has repeatedly encountered bumps and bumps. SWOT system analysis is an effective analysis method commonly used in enterprise strategic management, that is, by analyzing the advantages and disadvantages of the enterprise itself and the opportunities and threats brought by the external environment of the enterprise, the most suitable strategic choice is put forward on this basis. Using SWOT method to analyze the internationalization strategy of China petroleum enterprises will help us find our own orientation and development direction more clearly.

internal conditions

China petroleum enterprises

There are five advantages.

(1) Word of mouth and brand advantage. China's three major oil companies are all named after China. As a backbone state-owned enterprise, its reputation and brand advantages are very obvious. According to Fortune magazine's ranking of the world's top 500 companies in 2003, PetroChina and Sinopec ranked 69th and 70th respectively, and these two companies also ranked first and second among the top 500 Chinese enterprises. CNOOC ranks 38th among the top 500 Chinese enterprises. In the next few years, it is expected to gradually change from a simple upstream company to an upstream and downstream integrated energy company and enter the top 500 in the world.

(2) Capital and financing advantages. From April 2000 to February 2006, China Petroleum, China Petrochemical and China Offshore Oil successively went public overseas, which not only shows that China has made great progress in the reform of oil management system, but also helps to obtain investment funds from the international financial market, expand the scale of foreign oil and gas resources exploration and improve the level of international management. In the ranking of "Asian Enterprises 1000" in 2003, China Petrochemical Co., Ltd. and China Petroleum and Natural Gas Co., Ltd. were considered as the most profitable companies, although they only ranked 20th and 28th.

(3) Advantages of integrated operation. 65438-0998, China's petroleum and petrochemical industry was reorganized, and the three major domestic oil companies extended their industrial chains. The original division of labor system of exploration, development, refining, transportation, domestic sales and foreign trade has been replaced by the three major national oil companies with integrated upstream and downstream operations, and has truly become the main body of market competition with integrated upstream and downstream, domestic and foreign trade, production and marketing, and has gradually integrated with the modern enterprise system of large international multinational oil companies. This not only improves the international competitiveness of China oil companies, but also provides a broader space for their cooperation with foreign oil companies.

(4) Preliminary foundation and experience of international operation. After more than 50 years' development, China petroleum industry has made great progress in the construction of professional and technical teams in ideological concepts, spiritual outlook, theoretical innovation of petroleum geology and technological innovation of exploration and development. After more than ten years of international operation, PetroChina began to enter a virtuous cycle of self-accumulation and rolling development, and Sinopec and CNOOC, which followed closely, also accelerated the pace of implementing the "going out" strategy in recent years. In the process of participating in the development, construction and management of overseas projects with different scales and cooperation modes, I have accumulated some valuable experience in transnational operation.

(5) China petroleum enterprises also have a professional technical force with high quality and low labor cost.

The Weaknesses of Transnational Operation of China Petroleum Enterprises (Ⅱ)

(1) Enterprise management is immature. Generally speaking, the three major oil companies lack a unified medium-and long-term development plan, especially as domestic competitors, there is still a lack of clear ideas on how to form a joint force and keep consistent with the outside world in transnational operations. At the same time, the management of overseas subsidiaries by multinational companies in China is not perfect: some parent companies give overseas subsidiaries insufficient operational autonomy, which makes them miss the opportunity; Some parent companies let overseas subsidiaries go their own way, which makes it difficult for their internationalization experience to implement the overall business strategy of domestic parent companies. In addition, due to the weak self-restraint mechanism of state-owned investors, the phenomenon of asset loss of overseas companies occurs from time to time.

(2) The domestic resource base is under great pressure. At present, China's proven recoverable oil reserves are 5.28 billion tons, the remaining recoverable oil reserves are 2.25 billion tons, and the per capita recoverable resources are only 10 tons, ranking 37th in the world. Moreover, in 2002, the oil-gas reserve-production ratio in China was only 14.8 and 40.6 respectively, far below the world average of 46.3 and 60.7 (according to BP energy statistics). The oilfields discovered in the middle of last century generally entered the stage of high water cut (the groundwater content exceeded 80%), and the development cost increased, the output decreased and the benefit decreased. Moreover, the newly discovered oil and gas fields in recent ten years are mostly located in remote areas with harsh natural conditions in western China, which is difficult to develop and requires a lot of money from the state and oil companies. Thus, the transnational operation of China petroleum enterprises has a long way to go.

(3) The asset structure is unreasonable. China petroleum enterprises have invested a lot of money in infrastructure projects such as refineries and oil pipelines. In 2003, the operating rate of China Refinery was less than 80%. However, domestic oil giants are competing to build or expand refineries with capacity exceeding10 million tons. At the same time, relevant data show that exploration and exploitation of PetroChina only accounts for 6 1% of capital expenditure, while Sinopec only accounts for 40%, while the average expenditure of western oil companies in this respect is 70%. In the case of insufficient domestic crude oil production, it will be difficult for the three major oil companies to improve their ability to resist the risks in the international oil market if they cannot obtain more resources overseas.

(4) The international competitiveness is not strong. Foreign multinational oil companies have developed on the basis of oil resources, and the proportion of oil resources they control in the total processing is often above 50%, even exceeding 100%. In recent years, China Oil Company has invested a lot of money in overseas oil exploration and development, but most of the projects are located in areas with decreasing reserves, or small oil fields with low returns that large western oil companies are unwilling to patronize. In addition, due to the low production technology level of China petroleum enterprises, the environmental protection standards and quality of refined oil and related products are relatively low, and the comprehensive production cost of crude oil is high, so the products are not competitive in the international market.

(5) Not familiar with the international environment. As a strategic resource, petroleum plays an important role in the world economy and politics. It is not only the intersection of the interests of big countries, but also closely related to the international environment and the domestic political and economic environment of oil-producing countries. China petroleum enterprises have been "going out" for more than ten years, but they lack a team of high-quality transnational management talents who are proficient in foreign languages, business and international law. Moreover, the company still lacks sufficient understanding and handling skills on the pattern and influence of big countries competing for oil, the political trend of oil-producing countries, the characteristics and application of laws in various countries, and the relationship between local culture and customs.

external environment

Opportunities for transnational operation of China petroleum enterprises (O)

(1) The global oil resources and recoverable reserves are increasing. At present, under the condition of high oil price, many people are pessimistic about the foundation and prospect of world oil. You know, since the oil industry was born more than 100 years ago, the assertion that oil resources are about to run out has been heard all the time. However, these exaggerated assertions are always denied by historical facts. In fact, the evaluation of the final recoverable oil resources in the world is always revised, adjusted and improved with the development of social economy and the progress of science and technology. This shows that the transnational operation of China Oil Company has a certain resource base.

(2) After China's entry into WTO, it provides opportunities and favorable conditions for the international operation of oil enterprises. Joining the WTO will not only help China's oil enterprises to enjoy national treatment within the multilateral trade mechanism of the WTO, but also help them to participate in international economic cooperation and competition in a wider and deeper scope, more conveniently introduce foreign capital, technology and management experience, give full play to their late-comer advantages, and promote technological upgrading, equipment transformation and industrial structure optimization and upgrading of enterprises. With the development of globalization of oil economy and liberalization of oil trade, the oil security of various countries has increasingly become a kind of "collective security", which provides certain conditions for China oil enterprises to participate in international cooperation.

(3) China maintains good political relations with most oil-producing countries. Today, peace and development remain the theme of the world. As a responsible developing country and a permanent member of the United Nations Security Council, China's position and role in international affairs have been continuously improved, and its peaceful foreign policy has been widely praised by all countries in the world. China has established good diplomatic relations with most oil-producing countries in the world on the basis of the principle of peace. Especially with the Middle East, North Africa, Central Asia, Russia and other "world oil supply centers", the political and economic relations are constantly developing, creating a good international environment for China oil enterprises to carry out international operations.

(4) China's economic diplomacy and energy diplomacy have achieved initial results. China's rapid economic growth and huge and stable domestic market have created favorable conditions for China to develop "great economic and trade" relations with oil-producing countries and carry out economic diplomacy. In recent years, China has created a good international atmosphere for the transnational operation of China's oil enterprises through oil diplomacy. Due to the uneven distribution of oil resources in the world, many oil resource countries compete to open up to the outside world for their own economic development, and there are hundreds of opportunities for bidding and two-way negotiations for oil exploration and development every year. This provides favorable external conditions for China's energy diplomacy and transnational operation of oil enterprises.

(5) Breakthrough in oil and gas exploration theory and technology. With the development of seismic technology, it has become a reality to explore and exploit oil in deep-sea oil exploitation and complex terrain. At the same time, new breakthroughs have been made in automatic drilling system, intelligent completion system, artificial lifting technology of oil and gas, underground oil-water separation technology and seismic visualization technology based on computer technology, robot technology and telecommunication technology. All these have built a high-tech platform for China petroleum enterprises to implement transnational operations.

The Threats Faced by Transnational Operation of China Petroleum Enterprises (Ⅱ)

(1) The global competition for control of oil and gas resources is more intense. At present, American and European oil giants monopolize almost four-fifths of the world's high-quality oil resources, and it is not easy for China enterprises to enter their "sphere of influence". China is located in the new growth center of energy consumption in the Asia-Pacific region, which is in competition and conflict with neighboring oil consuming countries (such as the United States, Japan, India, South Korea, etc.). ) will be inevitable. The favorable space for China petroleum enterprises to expand the international oil and gas market may be continuously squeezed.

(2) The geopolitical pressure and risk of transnational operation of China petroleum enterprises are relatively high. China's overseas oil investment and oil imports are mainly concentrated in the Middle East, North Africa, Nigeria, Venezuela and other politically unstable regions and countries. At present, more than half of China's oil imports come from the Middle East. Because of the sharp ethnic and religious contradictions, many territorial disputes and the most unstable political situation in this area. Moreover, due to the influence of the United States, Britain and other countries on the situation in the Middle East after the Iraq war, China's oil enterprises should not only deal with the subtle interests of big countries, but also bear greater political risks when entering or importing oil from the region.

(3) The threat of oil hegemonism and the hidden danger of the lifeline of maritime transportation. In the past, oil resources have always been an important object of hegemony among big countries, and now big countries are still playing the game of global high-quality oil and gas resources. Especially the United States, its energy strategic goal is to use its military and economic advantages to establish a global oil hegemony system with multiple structures. Therefore, the United States not only monopolized a large number of oil resources, but also controlled many strategic offshore oil channels, such as the Strait of Hormuz and Malacca Strait, to restrict other countries. However, 60% of China's imported oil is heavily dependent on sea routes such as the Straits of Malacca, which will inevitably have a negative impact on China's overseas oil transportation safety.

(4) "China oil threat theory" keeps rising. In recent years, the United States and other countries have deliberately ignored the fundamental impact of the geopolitical turmoil of oil and gas caused by the Iraq war, the monopoly of oil in the United States and Europe, the reduction of investment and the restriction of production on the fluctuation of world oil prices, but they have been spreading the "China oil threat theory", saying that excessive oil imports from China have led to the rise of world oil prices, and China's growing energy demand poses a threat and challenge to the energy security of the United States and Japan. China may take military measures to maintain oil security, thus threatening regional stability and security. In recent years, the overseas expansion of China's oil enterprises has been repeatedly disturbed and excluded, which proves that the "oil threat theory" has restricted the international operation of China's oil enterprises.

(5) Global oil supply security risks still exist. As a strategic commodity, oil has both economic and political attributes. The global oil supply chain and price formation mechanism are not only restricted by the laws of market economy, but also by international political factors, so that oil prices often behave as so-called "political prices" in some cases. In the 30 years since 1973, the world oil price has soared many times, all of which were caused by political events. The fact that the oil price continued to rise in 2004 shows that once the major international oil markets are "calm", the risk of global oil price skyrocketing or temporary interruption of supply chain may appear.

Strategic countermeasures

Based on the above SWOT analysis, the choice of China petroleum enterprises' international operation development strategy should be the matching of their own advantages (S) and disadvantages (W) with opportunities (O) and threats (T) contained in the external environment, and the SWOT strategic matrix of transnational operation is put forward: SO strategy, WO strategy, ST strategy and WT strategy, as well as ten strategic countermeasures (see the table below).

To sum up, the strategic objectives of the three major oil companies in China to implement internationalization experience should be: relying on national strength and government energy diplomacy, making full use of "two markets and two resources" at home and abroad, taking the realization of national oil security as their own responsibility, taking the pursuit of profit maximization as the core, taking oil and gas exploration, development and operation as the leader, taking low-risk competition or cooperation under competition as the link, optimizing resource allocation on a global scale, giving full play to their respective comparative advantages, and building an international competitive enterprise with China characteristics as soon as possible.