NewsChina consolidates oil giants to boost domestic production under Xi’s directive

China consolidates oil giants to boost domestic production under Xi’s directive

China is the world's largest importer of crude oil and nearly three-quarters of its needs are met through imports.
China is the world's largest importer of crude oil and nearly three-quarters of its needs are met through imports.
Images source: © Getty Images | VCG
Przemysław Ciszak

1 July 2024 11:36

Giants CNPC, Sinopec, and seven other state-owned Chinese oil companies will collaborate under a new state body tasked with increasing oil and gas production in China. This move follows a directive from the country's leader, Xi Jinping.

According to Reuters, China, the world's largest crude oil importer, meets nearly three-quarters of its energy needs through imports. However, China is investing billions of pounds in maintaining domestic crude oil production levels exceeding 600,000 tonnes daily, essential for powering manufacturing activities and military services.

In light of this, China has established a new state entity. Its main task will be bringing domestic oil producers and other state-owned companies together.

New drills

The newly established unit will be responsible for exploring very deep oil and gas deposits and extracting more difficult-to-exploit unconventional resources, the state-owned energy group CNPC stated on Monday.

Reuters reminds us that this decision is a response to President Xi Jinping's call for the energy sector to create new productive forces that will contribute to increasing the country's energy security.

Joining forces

The state oil companies, which will play a crucial role in this process, will be tasked with exploiting deep onshore drills and accelerating the development of offshore oil fields. These efforts aim to increase oil production, which has grown by 2% annually since 2018.

China is expanding its gas capacities. Oil and gas giant CNOOC is accelerating work in the South China Sea region. It plans to develop the deposits there, where resources are estimated to be as much as 995 billion cubic metres. Gas production is expected to be ready as early as 2025.

As we wrote about China has also been working on increasing shale gas production for years. It is the country with the most significant such deposits globally, estimated to be around 36,800 billion cubic metres.

Among the companies that will play a crucial role in this process are the country's two dominant oil and gas producers—CNPC and Sinopec. However, the newly created entity will include seven other states: China Aerospace Science and Industry Corp, steel group Baowu, equipment manufacturer Sinomach, Dongfang Electric Group, and Minmetals.

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