The National Development and Reform Commission releases its projections for the remainder of the decade

China expects crude oil production to fall by 7% compared with its previous five-year plan as production from some of the country’s largest, and oldest, wells continues to decline. Output of natural gas, however, is expected to increase by almost two-thirds, according to a report from Reuters.

The next five-year development plan, released by the National Development and Reform Commission (NDRC) on Tuesday, pegs crude output around 200 million tonnes (4 MMBOPD), down from 215 million tonnes in the 2011-2015 plan.

China’s output fell throughout 2016 as state-owned oil companies closed in production from uneconomic fields amidst low crude oil prices. Crude production fell 6.9% in the first 11 months of 2016 to about 4 MMBOPD, the first decline since 2009 and the biggest in data going back to 1990, according to Bloomberg.

Consultancy group Wood Mackenzie sees production falling even further than the NDRC, forecasting a decline of nearly 500 MBOPD in crude production over the next four years.

“We don’t see any large greenfield oil developments coming on stream by 2020. As such, given the maturity and age of the main oil fields … we forecast an ongoing decline in output,” said Angus Rodger, Woodmac’s upstream research director.

On the natural gas side, the NDRC said it expects production will grow to 220 billion cubic meters by 2020, compared with 134 Bcm under the 2012-2015 five-year plan as Beijing prioritizes the sector’s growth.

The government is maintaining an earlier target for shale gas output at 30 Bcm, or 13.6% of the total.

Lower Chinese production helps OPEC

Lower crude oil production from China will likely help OPEC as the group as its members cut back on production. The 7% decline in Chinese production will mean the country needs to meet its growing demand for oil with more imports, much of which will likely be sourced from OPEC.

“China’s domestic crude output decline will certainly help OPEC’s plan to reduce global supply,” said Nelson Wang, a Hong Kong-based oil and gas analyst at CLSA. ”Even if that isn’t China’s intention, it’s just the reality that China can’t produce more under the current circumstances.”

There’s “little hope” the country’s aging oilfields can reverse the declines even as prices rebound, while new discoveries may not raise output as much as expected because of high production costs, said Bernstein’s Neil Beveridge, who forecasts the country will pump 4 percent less this year. Even after explorers improved efficiency over the past two years, the break-even point for new onshore oilfields is still about $50 a barrel, he said.

The lower domestic production combined with an increasing demand for oil will bring the country’s reliance on overseas supply above 65% of its total crude use this year, according to China National Petroleum Corporation’s (CNPC) research arm.

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