China produced a record amount of crude oil last year, at 216 million tons, with natural gas production also rising substantially, the National Energy Administration reported today.
Together, the oil and gas output of China in terms of oil equivalent rose to 420 million tons—a record high. Natural gas alone rose by 10 billion cubic meters last year. The annual growth rate was unchanged for the ninth year in a row, the NEA said.
Chinese oil and gas companies also boosted their reserves, with new recoverable oil and gas volumes at 1.32 billion tons of oil equivalent, the report also revealed. This was a 5.6% increase on the year. Of that total, newly discovered conventional oil and gas accounted for 1.29 billion tons, while unconventional oil and gas accounted for 30 million tons.
China has been putting a lot of effort into reducing its dependence on imported energy, and the war between the United States and Iran has helped—as has the government’s strategy of filling up storage with discount Russian and Iranian crude over the last two years. This gave China a supply cushion of an estimated 1 billion barrels that it tapped into when the war prompted a surge in international oil prices.
Higher domestic production has also helped but to a lesser extent—China is still nowhere near any meaningful self-reliance in energy commodities as demand rises much faster than local production of oil and gas.
Even so, China saw its oil imports drop to the lowest since 2017 in May, at an average of 7.8 million barrels daily. Imports were seen by Kpler even weaker in June, to the lowest since 2016, or about 6.4 million barrels daily. This has helped soften the Middle East oil disruption blow to the global economy, but analysts have warned that this softening is not about to last forever, as China’s demand for crude will eventually push it to raise imports.
By Irina Slav for Oilprice.com
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