JP Morgan expects that the situation in Venezuela will have little impact on China's major oil companies, and may benefit chemical stocks

JP Morgan estimates that after Maduro leaves Venezuela, local oil production may experience a brief shock, potentially dropping by 50%. However, if political and operational stability is restored, production will quickly rebound, with the possibility of local output returning to 1.4 million barrels per day within two years, and reaching 2.5 million barrels per day in the next decade, while current production is only 800,000 to 900,000 barrels per day.

As for the impact on Chinese oil companies, the bank indicates that although Venezuelan crude oil will account for 4% of China's total crude oil imports by 2025, due to U.S. sanctions, most of it is processed by independent refineries or small refineries, rather than listed companies like Sinopec (00386.HK) or PetroChina (00857.HK). Additionally, Sinopec and CNOOC (00883.HK) have no commercial assets in Venezuela. Moreover, if China were to lose Venezuelan crude oil, the impact on China's refining industry would also be limited, as there are still other crude oils available for substitution.

In terms of stocks, the bank is optimistic about PetroChina, as it has successfully decoupled from oil prices through its local natural gas business, expecting a dividend of RMB 0.26 in the second half of the year. Furthermore, the lower oil price and interest rate environment may accelerate the recovery of oil-based chemical stocks, leading the bank to give Hengli Petrochemical (600346.SH) an "overweight" rating. Based on weak short-term profit prospects, the bank assigns Sinopec a "neutral" rating, planning to reassess after its "14th Five-Year" planning strategy becomes clearer.

At the same time, the bank expects that Chinese oil service stocks will gain limited direct benefits from potential growth in drilling activities in Venezuela, with the main beneficiaries being Western oil service companies such as Schlumberger (SLB.US), Halliburton (HAL.US), and Baker Hughes (BKR.US)