Distinguished guests, ladies and gentlemen:

Good afternoon!

In this beautiful early summer, the best season of the year, we gather here once again at Huangpu river side to discuss new developments in the international crude oil market. On behalf of Shanghai Futures Exchange (SHFE) and Shanghai International Energy Exchange (INE), I would like to extend our sincere appreciation and warm welcome to all guests coming from afar!

After years of efforts and with the joint commitment and support of all market stakeholders, the INE officially released the Articles of Association of Shanghai International Energy Exchange, the Trading Rules of Shanghai International Energy Exchange and 11 relevant business rules on May 11 of this year, which marks the final stage of preparation for the listing of crude oil futures.

In recent years, the Asia-Pacific market has been capturing a growing share of the total oil consumption in the world and a dominant share of the increase in oil consumption. In 2016, China became the world’s second largest oil consumer and, in the first quarter of this year, became the world’s largest oil importer, with an import dependency of over 65%. However, there is no authoritative price benchmark currently in the market that can reflect oil supply and demand in China and the Asia-Pacific region at large. Significant price volatilities in the international oil markets over the past years have exposed companies related to the oil industry to huge risks, resulting in increasingly stronger risk avoidance demands from them. In this market environment, the development of China’s crude oil futures market will be conducive to the formation of a price system that reflects market supply and demand in China and the Asia-Pacific region, the exercise of the fundamental role of price in resource allocation, and the provision of effective price risk management instruments to industrial companies for avoidance of ongoing operational risks.

As the first futures product in China’s futures market which will be open to foreign investors, crude oil futures are an important step for China to open up its futures market and a critical starting point for foreign investors to participate in China’s commodity futures market.

With the successful conclusion of the Belt and Road Summit and acceleration of the development of the Belt and Road Initiative, China will cooperate with the Belt and Road countries on energy resources in a more comprehensive way and at a deeper level. Since the inception of the Belt and Road Initiative, China’s oil imports from the Belt and Road countries have reached record highs, accounting for around 65% of China’s total oil imports, which has made them China’s most important source of oil imports. By establishing close ties between consumers and producers of energy resources, the Belt and Road Initiative will effectively encourage in-depth international cooperation on energy resources, promote the development and utilization of oil resources in the Belt and Road countries and optimize resource allocation.

During more than three years since its establishment, the INE has been committed to the implementation of the pilot program for internationalization of China’s futures market and the development of the international platform for crude oil futures, with a focus on establishing a system of futures regulation and a framework of rules in line with the requirements of such internationalization, so as to develop experience for the internationalization of China’s futures market in the interests of the real economy.

Distinguished guests, ladies and gentlemen, I am looking forward to receiving insights, criticisms and suggestions from all experts and scholars attending this crude oil sub-forum. Let us work together to contribute to the establishment of a modernized and international energy market system.

Thank you!