July 7, 2014
Author: Mairdan Halifu, Analyst
Published by: PESGB, July/August Issue
China’s demand for energy has been growing rapidly due to fast and steady economic growth over the past decades. According to EIA (The U.S. Energy Information Administration) the demand for energy will continue to grow quickly and demand for oil and gas is expected to have a strong growth in future. So what is the current oil and gas production level in China? Where is the oil and gas production coming from? What are the major oil and gas producing companies in China?
China’s economy has increased rapidly in the past decade; as a result, the oil consumption of China has increased dramatically and reached more than 10.7 million barrels per day in 2013 according to EIA. Although China is considered to be the fourth largest oil producer in the world, oil supply is much lower than oil demand. In 2013, the oil production of China reached about 4,100 thousand barrels per day, including both onshore and offshore production. As it is indicated in Figure 1, in 2013 offshore oil production counted for about 20% of the total oil production of China.
Figure 2 shows the top 5 oil producing fields/areas in China. Most of the oil production comes from large mature oil fields located in the northern part of the country. PetroChina’s Daqing field is located in the northeastern part of China and is the largest oil producing field, which is contributing around 765 thousand barrels per day. Sinopec’s Shengli field is located in the Yellow River delta close to Bohai Sea. It is producing around 508 thousand barrels and ranked as the second largest oil producing field in China. PetroChina’s Changqing field in Ordos basin is producing approximately 460 thousand barrels per day, which ranks third on the list. The oil production from inland provinces in China has gradually increased over recent years. The production from Junggar and Tarim basins from Uyghur Autonomous region is around 225 thousand barrels per day. Liaohe oil field from Inner Mongolia is ranked fifth, producing around 210 thousand barrels per day.
In Figure 3, we can see similar patterns in the gas supply and demand as we did in the oil supply and demand for China. The domestic production is not matching the demand. Gas production in China has in fact increased rapidly during the last ten years. However, domestic gas demand is increasing faster than domestic gas production. The majority of gas production is from onshore fields with 90% of total gas production. Offshore fields only contribute approximately 10% to total gas production as of 2013.
Figure 4 shows the top 5 gas producing fields in China. China’s gas fields are mainly located in inland provinces, in the northern central northwestern part of China. In this area the natural gas is associated gas, which is related to the development of oil fields. Sichuan Basin is considered another major gas-producing region in China, and most of the gas fields are large non-associated gas fields. As of 2013, PetroChina’s Changqing Sulige gas field is the largest gas producing field in China. Sulige field is located in the Ordos Basin in Inner Mongolia. Tarim Basin is located in the Xinjiang Uyghur Autonomous Region and is considered the second largest gas producing region in China. Puguang field is located in the northeast region in the Sichuan province in China, which was discovered by Sinopec in 2006. The gas production from Sebei gas fields in Qinghai province is quite substantial and appeared as the fifth largest gas producing field in China.
Most of China’s onshore assets belong to PetroChina and Sinopec. As a result, onshore production is dominated by these two national oil companies, see also Figure 5. PetroChina’s major assets are mainly located in the northern and northwestern part of China and the Sinopec’s assets are mainly located in the center and southern part of China. Shaanxi Yangchang Petroleum is the fourth largest E&P company based on oil production and most of its assets are located in the Shaanxi province. Offshore production is from CNOOC. ConocoPhillips is the only foreign company that appears under the top 5 companies in Figure 5. ConocoPhillips has working interest in offshore fields where the operator is CNOOC in Bohai Bay and South China Sea, and two onshore exploration licenses in Sichuan Basin.