In a BMI report sent to Rigzone by the Fitch Group recently, analysts at BMI, a Fitch Solutions company, said China’s outlook for shale oil production is improving on the back of accelerated exploration and a series of new discoveries.
“State-owned companies are making notable progress in shale oil exploration and production, viewing shale as a key source of future supply as conventional fields mature and face steeper decline rates,” BMI analysts stated in the report.
The analysts went on to note that China “has significant potential in shale and tight oil” but said “replicating the U.S. shale boom remains unlikely”.
“State-owned companies cite abundant tight oil resources in the Ordos, Junggar, Songliao, Sichuan, Qaidam, Santanghu, Jiyang, North Jiangsu, and Bohai Bay basins,” the analysts said in the report.
“These firms are incentivized to pursue high-risk, high-cost projects regardless of global oil prices, given national priorities of energy security and self-sufficiency,” they added.
The analysts highlighted that the country’s National Energy Administration reported a 30 percent year on year increase in shale oil output in 2024, “to 6.0 million tons (around 120,000 barrels per day)”.
“Although shale currently represents a small share of total production, steady growth is expected,” the BMI analysts stated in the report.
“Most projects remain pilots with small capacities relative to conventional developments, and production growth will be constrained by challenging geological conditions,” they added.
“Unlike the U.S., exploiting China’s shale oil and gas resources is more challenging due to the complex and deep reservoir geology, lower reserves scattered across valleys, lower well productivity, and higher costs of production,” they continued.
“Currently projects produce small volumes between 10,000 barrels per day and 50,000 barrels per day, far lower than conventional fields like Daqing. Although China has made some progress in producing shale oil, the pace of production growth would remain slow, far less than enough to offset depletion in producing fields,” they said.
The analysts went on to note that “progress in terms of shale oil production could supplement China’s crude oil production” but said “it is unlikely to raise domestic output to a new level”.
“Achieving higher shale oil production will depend on the commercially viable large-scale production from new discoveries,” the analysts said.
In the report, the BMI analysts projected that PetroChina and Sinopec will continue to lead unconventional oil and gas exploration and production, “with rising investment burdens reflecting limited foreign participation”.
“International companies have shown little interest in shale oil in China, and firms such as Shell and ExxonMobil have scaled back their involvement,” they added.
“Sinopec increased capital expenditure for shale and ultra-deep oil and gas exploration by 30 percent in 2025, lifting spending to CNY8.4 billion [$1.18 billion] in the first three quarters from CNY6.4 billion [905 million] in 2024,” they continued.
“Sinopec’s shale works are concentrated in the Jiyang, North Jiangsu, and Bohai Bay basins, where the company reports breakthroughs in ultra-deep shale oil exploration. The Shengli Jiyang project remains Sinopec’s largest shale asset,” they said.
“In September 2025, Sinopec announced the Xinxing and Qintong discoveries in eastern China, with combined proven reserves of 180 million tons. However, we do not expect to see output from these reserves before 2030,” the analysts went on to state.
The BMI analysts also noted that shale oil exploration and production are central to PetroChina’s long-term strategy.
“Key projects include Qingcheng at the Changqing oilfield in the Ordos Basin, Jimsar at the Xinjiang oilfield and Gulong at the Daqing oilfield,” they highlighted.
“PetroChina produced 5.1 million tons of shale oil in 2024, accounting for about 85 percent of China’s total. Media reports indicate that the Changqing oilfield, China’s largest shale base in the Ordos Basin, surpassed 20 million tons in cumulative production by November 2025,” they added.
“The Gulong project in Qingcheng is awaiting full-scale development and could materially offset declines at mature fields. Output from Xinjiang and Changqing should rise with capacity expansions, but the effect on national production will be limited,” they warned.
“We expect incremental gains from these projects, which have yet to peak, to be largely offset by declines at aging fields, notably Daqing,” they noted.
Rigzone has contacted the State Council the People’s Republic of China and the State Council Information Office, the International Press Center of China’s Ministry of Foreign Affairs, PetroChina, Sinopec, ExxonMobil, and Shell for comment on the BMI report. At the time of writing, none of the above have responded to Rigzone.
To contact the author, email
