Resources and Energy

Energy Products

Crude oil

At the start of 2016, oil prices continued to decline, with the Brent oil price falling at one point to US$26 per barrel in January. A modest recovery began in February and thereafter trended upwards for the rest of the year, albeit the recovery was modest and oil prices still remained at relatively low levels, which had a significant impact on CITIC Resources’ oil business.

In 2016, CITIC Resources produced an average of 50,580 barrels per day (100% basis 1), an overall increase in oil production for the year and a year-on-year increase of 2%.

JSC Karazhanbasmunai (KBM), a 50% joint venture between CITIC Resources and JSC KazMunaiGas Exploration Production, produced a daily average of 38,800 barrels (100% basis), a slight drop of 1% compared with 2015.

1 100% basis: based on the production of every oilfield

The Yuedong oilfield in China, in which CITIC Resources holds a 90% interest, utilised thermal recovery on a more extensive scale during the year, resulting in a boost to average daily production of 10% year-on-year to 8,010 barrels (100% basis).

The Seram Block in Indonesia, in which CITIC Resources holds a 51% interest, increased its average daily production by 13% to 3,770 barrels (100% basis), attributable to the commencement of production on new development wells.

Coal

CITIC Resources holds a 14% participating interest in the Coppabella and Moorvale coal mines joint venture and interests in a number of coal exploration operations in Australia.

In China, Sunburst Energy has a 30% interest in Xin Julong coal mine in Shandong Province, of which the production capacity was 7 million tonnes in 2016.

Power generation

Sunburst Energy manages a number of coal-fired power stations in China, with a total installed capacity of over 6,340MW. In 2016, these stations yielded total electricity generation of 31.6 billion kWh, contributed in large part by the Ligang Power Plant in Jiangsu Province, one of the largest coal-fired power stations in the country with an installed capacity of 3,980 MW. The operating environment in 2016 was full of challenges, because higher coal price sent the cost of electricity generation soaring and the on-grid tariff was lowered. Although the net profit of the power generation business declined compared with 2015, it has outperformed most of its peers owing to an agile operation strategy by the management team.

In 2016, CITIC Limited acquired a 30% interest in Shenglu Power Plant, which is a coal-fired power station with two 1,000MW generating units in Inner Mongolia as part of the ±800kV ultra-high-voltage electricity transmission system between Shanghaimiao, Inner Mongolia and Shandong Province. The Shenglu Power Plant opened the tender process for construction last year.

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