Demand is not dropping, but China’s oil production has been decreasing since November 2015
Chinese oil production so far this year is down 8%, as the world’s fifth largest oil producer continues to be squeezed by lower commodity prices. China has produced 230.5 million barrels of oil in January and February this year, down from the 250 million barrels produced in the first two months of 2016.
Demand has not dropped, though, as Chinese crude imports grew by 12.5% to 482.3 million barrels.
Chinese natural gas production has not seen a decline, as production in the first two months of this year is 888.2 Bcf. This is virtually unchanged from the 885.4 Bcf produced in the first two months of 2016. Like crude oil, though, imports have risen by about 7.5% so far this year.
Chinese oil production has been hit hard by the industry downturn, as expensive fields have been shut in. After growing steadily since 2009, the country’s oil output began to fall in November 2015. Total yearly crude production fell by 6.9% in 2016 to 1.464 billion barrels. This is China’s largest crude output drop since at least 1990. Writing in January, Bloomberg predicted that 2017 could see another production drop of about 7%
Source: Bloomberg
The collapse in Chinese production is a positive for U.S. producers, though, as it reinforces the effect of the current OPEC cuts.
China’s total production in 2016 dropped by about 313 MBOPD, about one quarter of the OPEC cut commitment.
According to Xinhua News Agency, the nation expects to produce 1.466 billion barrels of oil in 2020.
This could be a difficult goal to achieve, especially if Bloomberg’s decline prediction proves correct. Most of Chinese oil production comes from mature fields that are declining. At current prices many of these fields are not economic in primary production, let alone when utilizing the EOR techniques that would be required to increase production.
