- China is the world’s second-largest consumer of oil and gas and the sixth-largest producer of oil and gas globally. The Chinese energy market is dominated by state-owned oil and gas companies by developing the country’s domestic reserves, building and operating pipelines, managing, and filling its strategic petroleum reserves (SPR).
- China’s oil consumption has seen significant growth with rising demand from the increasing automotive fleet across the country. Oil consumption increased to 14,225 thousand barrels per day in 2020, as compared to 14,005 thousand barrels per day in 2019. This is expected to attract major investments to meet the demand.
- Furthermore, to meet the county’s oil and gas demand and boost domestic energy supplies, in 2020, China’s Ministry of Natural Resources announced the opening of foreign direct investments in the oil and gas industry. It aims to allow foreign companies to explore for and produce oil and gas in the country.
- In February 2021, CNOOC announced a total capital expenditure of USD 15.46 billion, with targeted net production of 545-555 million barrels of oil equivalent (Mboe).
- Further, in March 2021, Sinopec anticipates spending CNY 66.8 billion on upstream exploration, focusing on shale gas development in southwest China and the construction of liquefied natural gas (LNG) terminals in coastal areas.
- In November 2021, ExxonMobil announced the final investment decision (FID) to build a multi-billion dollar petrochemical complex in south China’s Guangdong province. The Dayawan plant will produce performance polymers used in packaging, automotive, agricultural, and consumer products for hygiene and personal care.
- Hence, making some of the major investments with the help of domestic and foreign firms is expected to drive the Chinese oil and gas market during the forecast period.
Recent Developments
- In June 2021, China National Petroleum Corporation (CNPC) announced the discovery of a new 1-billion-ton super-deep oil and gas area in the Tarim Basin in Northwest China’s Xinjiang Uygur Autonomous Region. The discovered well is located in the Fuman Oilfield area, the main block for crude oil production in the Tarim Oilfield. Its drilling depth reached 8,470 meters, and the height of the test oil column hit 550 meters.
- In September 2021, CNOOC Limited announced a ‘large-sized discovery’ on the Kenli 10-2 oilfield in Bohai Bay. The Kenli 10-2 oilfield is located in Laizhou Bay Sag in Southern Bohai Bay, with an average water depth of about 50 feet.
- In January 2022, Sinopec discovered a new oil and gas area with approximately 100 million tonnes of reserves in the Tarim Basin of northwest China’s Xinjiang Uygur Autonomous Region. These latest reserves in Sinopec’s Shunbei oil and gas field are estimated to provide 88 million metric tons of condensate oil and 290 billion cubic meters of natural gas.