China is creating a new entity that brings together national oil producers and other state-owned companies to search for ultra-deep oil and gas reserves and address the challenges of extracting non-conventional resources.
This initiative was announced by the state energy group CNPC on Monday.
The move aligns with President Xi Jinping’s call for “new productive forces” in the energy sector to enhance the country’s energy security, according to CNPC’s website.
The new entity will include CNPC and Sinopec, China’s leading oil and gas producers, along with seven other state groups such as China Aerospace Science and Industry Corp, steel group Baowu, equipment builder Sinomach, Dongfang Electric Group, and Minmetals.
CNPC stated that the goal of this collaboration is to “gather wisdom and strength to jointly build an industry chain from ultra-deep oil and gas exploration to development to engineering.”
The group plans to drill for conventional resources at ultra-deep wells reaching depths of up to 10,000 meters (6.21 miles) in regions like northwest Xinjiang’s Tarim basin, where CNPC and Sinopec are already significant players.
Additionally, the group will explore deep shale oil and coal-seam gas resources.
As the world’s largest crude oil importer, China relies on imports for nearly three-quarters of its oil needs.
The country has been investing billions to maintain its domestic crude oil production at over 4 million barrels per day, a level deemed necessary to support its manufacturing and military activities.
Despite these efforts, state oil majors have faced challenges such as declining output from large mature fields and the geological and cost difficulties of extracting shale oil and gas.
However, years of drilling deeper onshore and accelerating offshore oilfield development have resulted in a 2% annual growth in output since 2018.
