China’s crude oil imports at a four-month high as the country halts high-cost production

Crude oil production from the world’s largest energy consumer hit a six-year low in August, according to information released by the National Bureau of Statistics Tuesday. Production in China fell 9.9% from a year ago to about 3.9 MMBOPD, the lowest since December 2009, according to data from Bloomberg. Output is down 5.7% during the first eight months of the year.

As crude oil prices remain below $50 per barrel, many Chinese producers are cutting back on production in high-cost fields. China was the world’s fifth-largest producer as of last year, but the state-owned E&Ps continue to lower their output targets. The country’s biggest producer, PetroChina, cut its 2016 domestic crude output expectations to about 2.1 MMBOPD, a 6% decline from 2015. Production from Sinopec is on a similar path to about 763 MBOPD.

“China’s crude output won’t see an apparent rebound unless Brent recovers to $60 a barrel level, as most of China’s aging oilfields can’t make a profit below this price,”  Tian Miao, an analyst with policy researcher North Square Blue Oak, said.

Lower domestic production has forced China to increase imports to meet its demand. Crude oil imports reached 7.8 MMBOPD, their highest level in four months, according to data released by the General Administration of Customs last week.

Declining production in China could help tighten the oil market more quickly, but with both the IEA and OPEC extending their predictions for when the market will balance, it may not be enough to create positive movement for oil prices in the near-term. Both the Paris-based agency and the Organization of Petroleum Exporting Countries see market balance toward the end of 2017, according to reports released by each this week.

Earlier this year, Forbes put out its ranking of the biggest public oil and gas companies. China occupies three of the top 25 positions.

Forbes’ List of the 25 Biggest Public Oil & Gas Companies

  1. Gazprom (ticker: GAZP,com) – Russia – 8.38 MMBoepd – EV $84.3 billion
  2. Rosneft (ticker: ROSN,com) – Russia – 5.07 MMBoepd – EV $72.5 billion
  3. ExxonMobil (ticker: XOM,com) – USA – 4.10 MMBoepd – EV $390 billion
  4. PetroChina (ticker: PTR,com) – China – 4.07 MMBoepd – EV $303 billion
  5. BP (ticker: BP;com) – UK – 3.24 MMBoepd – EV $121 billion
  6. Royal Dutch Shell (ticker: RDS.A –com) – Netherlands – 2.95 MMBoepd – EV $216 billion
  7. Chevron (ticker: CVX;com) – USA – 2.62 MMBoepd – EV $207 billion
  8. Petrobras (ticker: PBR;com) – Brazil – 2.55 MMBoepd – EV $132 billion
  9. Lukoil (ticker: LKOH;com) – Russia – 2.40 MMBoepd – EV $36.2 billion
  10. Total (ticker: TOT;com) – France – 2.35 MMBoepd – EV $136 billion
  11. Statoil (ticker: STO;com) – Norway – 1.81 MMBoepd – EV $63 billion
  12. Eni (ticker: E;com) – Italy – 1.69 MMBoepd – EV $74 billion
  13. ConocoPhillips (ticker: COP;com) – USA – 1.59 MMBoepd – EV $71.5 billion
  14. Surgutneftegas (ticker: SGTZY;ru) – Russia – 1.49 MMBoepd – EV $8.5 billion
  15. CNOOC (ticker: CEO;com) – China – 1.36 MMBoepd – EV $397 billion
  16. China Petroleum & Chemical [Sinopec] (ticker: SNP;com) – China – 1.32 MMBoepd – EV $130 billion
  17. Oil and Natural Gas Corp. (ticker: ONGC;com) – India – 1.07 MMBoepd – EV $23 billion
  18. Anadarko Petroleum (ticker: APC;com) – USA – 840,000 Boepd – EV $43 billion
  19. Canadian Natural Resources (ticker: CNQ;com) – Canada – 790,000 Boepd – EV $40 billion
  20. Devon Energy (ticker: DVN;com) – USA – 680,000 Boepd – EV $29 billion
  21. Ecopetrol (ticker: EC;com) – Colombia – 670,000 Boepd – EV $33 billion
  22. Occidental Petroleum (ticker: OXY;com) – USA – 650,000 Boepd – EV $57 billion
  23. Suncor Energy (ticker: SU;com) – Canada – 580,000 Boepd – EV $50 billion
  24. EOG Resources (ticker: EOG;com) – USA – 570,000 Boepd – EV $47 billion
  25. Repsol (ticker: REP;com) – Spain – 560,000 Boepd – EV $33 billion

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