2023-12-20 08:43:05
China’s strong growth in oil production in recent years, the result of a concerted investment effort, is expected to slow in 2024 as falling production from mature fields forces state oil companies to exploit shale reserves and ultra-deep reserves, which are more difficult to exploit.
While China is the world’s largest importer of crude oil, it was also the world’s sixth-largest crude oil producer last year, according to the EI World Energy Statistical Review, with significant investment enabling to reverse a significant decline between 2015 and 2018.
Production for 2023, at around 4.18 million barrels per day (bpd), remains below the 2015 record of 4.3 million bpd, but Goldman Sachs said the upward surprise in Chinese production will not was surpassed only by higher-than-expected production from the United States, Iran and Russia this year.
For next year, analysts and agencies are divided on the outlook, with forecasts ranging from a production decline of 31,000 bpd to an increase of 60,000 bpd, a slowdown in growth that is likely to increase China’s dependence on imports.
“The majority of China’s oil fields are in the mature phase, facing a natural decline in production, (while) the scarcity of substantial new discoveries poses a challenge to maintaining long-term production growth at current rates.” , said Lin Chen, analyst at Rystad Energy.
After a 12% drop in production between 2015 and 2018, national oil companies Sinopec Corp, PetroChina and CNOOC Ltd invested money in increasing the recovery of existing fields and exploring new fields, as part of Beijing’s efforts to strengthen energy security.
Since 2018, national oil production has increased by an average of 2% per year.
“Chinese majors have been working at maximum capacity to increase production,” with CNOOC in the lead, said Yu Baihui, analyst at S&P Global Commodity Insights.
BOOMING BOHAI
According to the National Energy Administration (NEA), production from China’s offshore fields reached 58 million metric tons in 2022, or 1.16 million bpd, accounting for 60% of the total increase in the country’s production, centered on the Bohai Basin, off China’s east coast, including the Bozhong 19-6 and Kenli 10-2 fields.
Offshore specialist CNOOC, Bohai’s main company, increased the region’s production by 22% between 2018 and 2022.
On land, state producers are developing shale assets and deep reserves, largely in the west, including Sinopec’s development of one of the world’s deepest reserves in the Tarim Basin of the region. Xinjiang.
China’s annual shale oil production will exceed 3 million tonnes in 2022, nearly four times more than in 2018, according to the NEA.
FRUITS WITHIN REACH
However, due to technical difficulties in exploring these wells, China’s oil production is unlikely to continue to grow.
“New deposits tend to fall into two camps: difficult, deep and remote new deposits onshore, and marginal new discoveries offshore, mainly by CNOOC,” said Angus Rodgers, head of upstream analysis for the Asia-Pacific region at Wood Mackenzie.
The consultancy forecasts that domestic production will decline by 0.8% to 3.94 million bpd next year, and will see a slow decline in the following years.
However, Rystad forecasts a 1% increase from 2023 to 4.22 million bpd next year, although he is less optimistic regarding growth following 2024.
The International Energy Association (IEA) expects production to rise 1.4% to 4.36 million bpd.
China’s state oil companies are now being pushed to go following the “low hanging fruit,” Woodmac’s Mr. Rodgers said, such as PetroChina’s Qingcheng shale oil field in the Ordos Basin.
PetroChina estimates there are some 7.3 billion barrels of oil in place at Qingcheng, but high costs mean only a small portion of that oil is currently commercially viable, Woodmac said.
“We think it will be very difficult for China to maintain its oil production growth,” Mr. Rodgers said.
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