Chinese crude output slips 4.1% in 10M-17

23 November 2017, Week 46, Issue 670

China’s crude oil production has continued to fall this year on the back of reduced development spending at mature onshore fields as well as natural declines at offshore projects.

Output in the January-October period slid by 4.1% year on year to 160.12 million tonnes (3.86 million bpd), the National Bureau of Statistics (NBS) said last week. October production slipped by 0.4% from a year earlier to 16 million tonnes (3.78 million bpd), the lowest level since the bureau began publishing records in 2011.

State-owned China National Petroleum Corp. (CNPC) decided three years ago to downsize operations at, or even shut in, mature and marginal fields that had plateaued. One such field is the country’s former super-giant, Daqing, where production is being maintained by expensive tertiary lifting technologies such as polymer injection. The fading field is located in China’s northeastern province of Heilongjiang.

Lower output in October was also the result of what CNOOC Ltd described as natural declines at its Bohai Bay fields. These carry considerably higher lifting costs than the company’s other offshore projects, owing to their complex geology and comparatively smaller reservoirs. Budgetary concerns have prompted the offshore specialist to cut Bohai production by 2 million tonnes (40,000 bpd) this year.

While China’s oil output has sunk to fresh lows, the natural gas sector is still performing well thanks to the central government’s ongoing support for the cleaner-burning fuel. Beijing is working hard to convince utilities to shift from coal to gas.

In October, gas output jumped 15.4% year on year to 12.41 bcm. Production in the first 10 months climbed 9.7% on the year to 121.12 bcm.

Industry sources said producers such as CNPC and Sinopec had started to ramp up their output last month and were trying to store as much as they could in order to meet peak winter demand.

The central government said earlier this year that national gas demand would likely hit 216.2 bcm this year, accounting for 6.5% of the total energy mix.

Edited by

Andrew Kemp

Editor

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