China’s dependence on oil is growing
Despite all the efforts China is doing to lower its dependence on oil, this is naturally growing and experts say China is set to become the largest natural gas consumer by 2040.
What is pretty clear now is that China is importing increasing volumes of oil not only because of demand growth, but also because its domestic oil production is declining as large ageing fields mature and as companies cut production from higher-cost fields amid the lower-for-longer oil prices.
In other words since their industrial production is still developing, Chinese dependence on crude oil imports is continuously rising and is set to further grow in the future.
China, is making large-scale efforts to discover new reserves to satisfy its increasing demands. It is already the country with the second largest emergency crude oil stockpile and has the thirteenth largest volume of proven oil reserves in the world with 25,620 million barrels of commercially recoverable crude oil.
If we take a look at an overview the U.S. Department of Commerce, we will see that China’s oil import dependence exceeded 65.6 percent in 2016 and it is expected to rise to 80 percent by 2030. In 3 years (2020), Chinese consumption of crude oil is expected at 12 million bpd. At the same time, PetroChina, Sinopec, and CNOOC have reduced production from their higher-cost fields in China because they have been unable to compete at oil prices below $ 50 a barrel. Consequently, domestic oil production fell by 6.9 percent to 3.98 million bpd in 2016, the lower oil prices prompting China to fill its strategic petroleum reserve by importing more, and cheaper, foreign crude oil.
The only solution for China is represented by new oil field in some of its most troubled regions such as Xinjiang province. According to recent studies there should be a new oil field carrying over 100 crore tons of crude oil in China. The oil field that is located in the troubled Xinjiang Uyghur Autonomous region could well be a crucial game changer for the energy-hungry country. According to PetroChina, quoted in the Xinhua report, the area has a proven oil reserve of 52 crore tons and may contain up to 124 crore tons of reserve. Despite this new discover, China will not be capable of free itself from oil’s dependence, even by investing heavily in alternative energy resources.
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