Guosen Securities Co.,Ltd. released a research report stating that new policies in the petrochemical sector will directly exempt key equipment for offshore exploration and development from import tariffs. This measure is expected to lower equipment procurement costs and reduce the overall expenses associated with offshore oil and gas exploration, thereby improving project internal rates of return. It is also seen as beneficial for advancing the development of deepwater oil and gas fields. Additionally, a value-added tax rebate mechanism for imported natural gas will help stabilize cost fluctuations, particularly during periods of high gas prices, easing the cost burden on pipeline gas and LNG imports. The main viewpoints of Guosen Securities Co.,Ltd. are as follows:
On February 13, 2026, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued a notice on import tax incentives for energy and resource exploration and utilization during the 15th Five-Year Plan period. The policy includes three key provisions: (1) Exempting import tariffs on equipment, instruments, parts, and special tools that are not domestically producible or do not meet performance requirements, and are directly used in self-operated offshore oil and gas exploration projects or emergency pipeline rescue operations within China's maritime areas. (2) Exempting both import tariffs and import VAT on equipment, technical documentation, instruments, parts, and special tools that are not domestically producible or do not meet performance requirements, and are directly used in Sino-foreign cooperative offshore oil and gas exploration projects. (3) Refunding a certain proportion of import VAT on natural gas imports received by cross-border pipeline projects approved by the National Development and Reform Commission, as well as LNG import and storage facilities, including expansion projects approved by provincial governments.
Guosen Securities Co.,Ltd. offers the following analysis: (1) Given China's high dependence on foreign oil and gas, the country has prioritized offshore energy development as a strategic focus to enhance energy security. The tax incentives aim to lower the cost of importing exploration equipment, thereby strengthening domestic supply capabilities and safeguarding national energy security. (2) Imported natural gas plays a crucial role in China's energy supply mix, but it is often priced higher and subject to significant volatility. The VAT rebate mechanism for eligible natural gas imports will help mitigate cost pressures and support energy security.
Investment recommendations: Investors are advised to focus on offshore oil and gas developers and service providers, including CNOOC, China Oilfield Services Limited, and Haoyu Development. For natural gas imports, suggested targets include PetroChina and CNOOC.
Risks to consider: Abnormal fluctuations in crude oil prices due to geopolitical conflicts; potential impacts of U.S. tariff policies on global trade and the economy; and disruptions to oil development caused by extreme weather conditions.
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