- According to Oil & Gas Journal (OGJ), China had 20.4 billion barrels of proven oil reserves as of January 2011, up over 4 billion barrels from two years ago. China's largest and oldest oil fields are located in the northeast region of the country. China produced an estimated 4.3 million bbl/d of total oil liquids in 2010, of which 96 percent was crude oil. China's oil production is forecast to rise by about 290 thousand bbl/d to over 4.5 million bbl/d in 2012.
- China consumed an estimated 9.2 million barrels per day (bbl/d) of oil in 2010, up nearly 900 thousand bbl/d, or over 10 percent from year-earlier levels. China's net oil imports reached about 4.8 million bbl/d in 2010 and it became the second-largest net oil importer in the world behind the United States in 2009. EIA forecasts that China's oil consumption will continue to grow during 2011 and 2012, and the anticipated growth of 1.1 million bbl/d between 2010 and 2012 would represent almost 40 percent of projected world oil demand growth during the 2-year period.
- 1959 - Production began at the Daqing Oil Field
- 1999 - The Peng Lai field China's largest offshore oilfield was discovered
- 2006 - The first LNG import terminal was commissioned
- 2008 - The government launched the National Energy Administration (NEA)
- The Chinese government's energy policies are dominated by the country's growing demand for oil and its reliance on oil imports.
- The National Development and Reform Commission (NDRC), a department of China's State Council, is the primary policymaking, planning, and regulatory authority of the energy sector, while four other ministries oversee various components of the country's oil policy.
- The government launched the National Energy Administration (NEA) in July 2008 to act as the key energy regulator. The NEA, linked with the NDRC, is charged with approving new energy projects in China, setting domestic wholesale energy prices, and implementing the central government's energy policies, among other duties.
- In January 2010, the government formed a National Energy Commission with the purpose of consolidating energy policies among the various agencies under the State Council. Reforms under the new government leadership include consolidating and streamlining ministries and expanding the NEA's purview.
- China's largest oil fields are mature, and production has peaked, leading companies to invest in techniques to sustain oil flows at the mature fields, while also focusing on developing largely untapped reserves in the western interior provinces and offshore fields.
- After bolstering domestic oil output in 2010, China has experienced more moderate oil production growth since then. China boosted its domestic oil output by over 7% in 2010, after incremental growth in the previous two decades. Oil production in 2013 reached nearly 4.5 million bbl/d, about 50% higher than the level two decades ago.
- Approximately 81% of Chinese current crude oil production capacity is located onshore, while 19% of crude oil production is from shallow offshore reserves. New offshore production, enhanced oil recovery (EOR) of older onshore fields, and small discoveries in existing basins are the main contributors to incremental production increases.
- China's NOCs are investing a great deal in EOR techniques such as water injection, polymer flooding, and steam flooding, among others, to offset oil production declines from these mature, onshore fields.
- For further information, see Exploration and Production in China
National oil companies
- China's national oil companies (NOCs) wield a significant amount of influence in China's oil sector.
- Between 1994 and 1998, the Chinese government reorganized most state owned oil and gas assets into two vertically integrated firms that own both upstream and downstream assets: the China National Petroleum Corporation (CNPC) and the China Petroleum and Chemical Corporation (Sinopec).
- These two conglomerates operate a range of local subsidiaries, and together control China's upstream and downstream oil markets. CNPC is the leading upstream player in China and, along with its publicly-listed arm, PetroChina, accounts for an estimated 53% and 75% of China's total oil and natural gas output, respectively
- The China National Offshore Oil Corporation (CNOOC), which is responsible for offshore oil exploration and production, has seen its role expand as a result of growing attention to offshore zones.
- Whereas onshore oil production in China is mostly limited to China's NOCs, international oil companies (IOCs) have been granted greater access to offshore oil prospects and technically challenging gas fields, mainly through production-sharing contracts (PSCs) and joint ventures (JVs).
- IOCs involved in offshore exploration and production (E&P) working in China include: ConocoPhillips, Shell, Chevron, BP, BG, Husky, Anadarko, and Eni, among others. China's NOCs must hold the majority participating interest in a PSC and can become the operator once development costs have been recovered. IOCs offer their technical expertise in order to partner with a Chinese NOC and make a foray into the Chinese markets.
- ConocoPhillips China Inc. (COPC) is a wholly-owned subsidiary of ConocoPhillips with about 800 employees undertaking oil and gas exploration and production operations in China through cooperation with Chinese and international partners.
- China continues to invest in natural gas pipeline infrastructure to link production areas in the western and nothern regions of the country with demand centers along the coast and to accommodate greater imports from Central Asia and Southeast Asia.
- China had nearly 32,000 miles of main natural gas pipelines at the end of 2012. China's natural gas pipeline network is fragmented, although NOCs are rapidly investing in the expansion of the transmission system to connect more supplies to demand centers along the coast and in the southern regions as well as integrating local gas distribution networks. While the major NOCs operate the trunk pipelines, local transmission networks are operated by various local distribution companies throughout China.
- CNPC is the key operator of the main gas pipelines, including the West-to-East pipelines, and holds over three-fourths of the gas transmission in China. CNPC moved into the downstream gas sector recently through investments in gas retail projects as well as investments in several pipeline projects to facilitate transportation for its growing gas supply. CNPC developed three parallel pipelines, the Shan-Jing pipelines, linking the major Ordos basin in the North with Beijing and surrounding areas.
- The third Shan-Jing pipeline began operations in 2011. The NOC fully completed its Zhongwei to Guiyang Gas pipeline, which delivers gas from the West-to-East pipeline network in the north-central part of the country to the gas markets in southwestern China, in 2013. Sinopec is also a major player in the downstream transmission sector, operating pipelines in the Sichuan province.
- For further information, see Oil and Gas Pipelines in China
- Robust growth in natural gas demand in recent years, particularly in the urban coastal areas, has led China to become the third largest LNG importer and to accelerate development of its LNG and pipeline infrastructure.
- Since the country built its first regasification terminal, Dapeng LNG, in 2006, natural gas imports have risen dramatically, making China one of the largest LNG consumers in the world. Roughly half of China's total natural gas imports were in the form of LNG in 2012.
- In 2012, China imported 706 Bcf, a 20% increase from 581 Bcf in 2011. Data estimates for 2013 show LNG imports climbing even higher to 749 Bcf for the first 11 months of the year. China, consuming over 6% of the global LNG trade, quickly became the world's third highest LNG importer, exceeding Spain for the first time in 2012.
- For further information, see LNG Terminals and Trade in China
- As part of its goal to diversify crude oil import sources and meet oil product demand, China has steadily augmented its refining capacity, which climbed to more than 13 million bbl/d in 2013.
- China is steadily expanding its oil refining capacity to meet its strong demand growth and to process a wider range of crude oil types. The country now ranks behind the United States and the European Union in amount of refining capacity.
- China's installed crude refining capacity was an estimated 13 million bbl/d by the end of 2013, around 890,000 bbl/d higher than in 2012, according to FGE. These new refineries and expansions are expected to ramp up refinery runs in 2014 as crude oil supply becomes available and product demand rises in certain regions. Some of the new refineries are designed to accept all grades of crude oil, making Chinese refineries a strong regional competitor.
- The country not only plans to meet its swiftly growing domestic demand but also to export products within the region. Various sources estimate that China will add another 500,000 bbl/d of net capacity in 2014. FGE anticipates China adding 4.4 million bbl/d of net capacity between 2013 and 2020, pushing total capacity to over 17 million bbl/d.
- For further information, see Oil Refining and Refinery Projects in China