At the end of 2011, international oil prices will remain at a high level, bringing great cost pressure to the basic chemical industry. In 2012, global economic growth is expected to slow down further, the European debt crisis has become the primary risk factor, and world oil supply and demand will tend to loosen. The overall international oil price will be lower than the level in 2011. It is expected that WTI oil price will be 90-100 US dollars/barrel and Brent oil price will be 105 US dollars/barrel, and the price difference between the two will narrow. The leading factors affecting international oil prices mainly include the development of the world economy, the trend of the US dollar and the geopolitical situation in the Middle East. In the short term, the continued escalation of the situation in Iran has caused this wave of rising international oil prices. However, in the medium to long term, the most important factor that dominates the trend of international oil prices is the growth rate of world economic development. In 2012, the European economy was struggling, and the U.S. economy was struggling. Recovery, growth in emerging market countries is slowing down, and the global economy is more likely to face a further downturn, so it is difficult for oil prices to exceed the 2011 level. However, due to expectations of loose liquidity and the complex evolution of the situation in the Middle East, international oil prices are expected to remain at high levels. High oil prices are good for upstream oil exploration-related companies. For downstream basic chemical companies, with the demand side sluggish, the squeeze on the cost side has made the companies even worse.

In 2012, the total global investment in oil and gas exploration and development reached a new high. On the basis of 12% in 2011, it increased by another 10% to reach US$598 billion. The increase has exceeded 10% for three consecutive years. The exploration and development hot spots remain Will be deepwater, unconventional oil and gas and LNG. Investment in oil and gas exploration and development will receive more attention in China, which is mainly determined by China's energy structure. China's energy structure is rich in coal, poor in oil and little gas, and its dependence on foreign oil and gas is increasing. In 2011, its dependence on foreign oil and crude oil exceeded 55%. China's huge oil and gas demand forces the government and enterprises to increase their efforts in oil and gas exploration and development. In terms of petroleum, the country has increased its expansion into deep sea areas since 2011; in terms of natural gas, it has achieved certain results in the western region; in addition, it has also increased its exploration and development of unconventional oil and gas such as shale gas and coalbed methane. At the same time, the country has also issued a series of policy plans, such as the "Strategic Action Plan for Prospecting Breakthroughs (2011-2020)" and the 12th Five-Year Plan for various sub-sectors, which emphasizes increasing the exploration of related oil and gas resources. In terms of development efforts, the next 12th Five-Year Plan period will be an important period of development opportunities for our oil and gas exploration and development.

Since 2004, oil and gas consumption has increased rapidly, and China's oil and gas field development surface system equipment industry has maintained a rapid growth trend. Since 2002, the capital expenditures of the three major oil groups, PetroChina, Sinopec and CNOOC, in the domestic oil and gas exploration and production industry have increased year by year. The average compound growth rate is about 20%. Through the analysis of crude oil and natural gas investment funds, the Oil and Gas Field Development Surface System Equipment Industry Research Team of the Qianzhan Industry Research Institute estimates that the market size of China's oil and gas field development surface system equipment industry is about 50 billion yuan.

Survey data shows that in 2010, my country's proven natural gas reserves were 2.8 trillion cubic meters, accounting for only 1.5% of the world's total proven natural gas reserves. The compound growth rate of China's proven natural gas reserves in the ten years from 2000 to 2010 was 7.2%, while the compound growth rate of domestic natural gas production during the same period reached 13.5%. The growth of reserves also lagged behind the growth of demand, causing my country's natural gas reserves and extraction ratio to continue to decline. The 29.0 years in 2010 was far lower than the world average of 58.6 years during the same period.

Since 2012, in the face of limited domestic production increases, my country’s natural gas supply still needs to be met by large amounts of imported natural gas. In the first half of 2012, my country imported a total of 12.782 million tons of natural gas, a year-on-year increase of 30.6%, of which 6.670 million tons of liquefied natural gas were imported, a year-on-year increase of 28.9%; and 6.112 million tons of gaseous natural gas were imported, a year-on-year increase of 32.5%.