China’s surging oil production growth is expected to ease in 2024 as falling output from mature fields requires state oil companies to tap more challenging shale and ultra-deep reserves.
While China is the world’s biggest crude importer, it was also the world’s sixth-largest crude oil producer last year, with heavy investment helping to reverse a significant decline between 2015 and 2018.
Production for 2023 at around 4.18 million barrels per day (bpd) remains below the 2015 record of 4.3 million bpd, according to Reuters, but Goldman Sachs said that the upside surprise of China’s output trails only the higher-than-expected production this year from the U.S., Iran and Russia.
For 2024, analysts and agencies are divided on the outlook, with forecasts ranging from a drop in output by as much as 31,000 bpd or an increase of up to 60,000 bpd, a growth slowdown that is likely to increase China’s import dependency.
“The majority of China’s oil fields are in a mature phase, facing natural production declines, (while) the scarcity of substantial new discoveries poses a challenge to sustaining long-term production growth at current rates,” said Rystad Energy analyst Lin Chen.
After a 12% drop in output between 2015 and 2018, national oil companies Sinopec Corp, PetroChina and CNOOC Ltd (0883.HK) ploughed cash into increased recovery at existing fields and exploration of new ones amid Beijing’s push for greater energy security.
Since 2018, domestic oil output has grown an average of 2% per year.
“The Chinese majors have been working at maximum capacity to grow production,” led by CNOOC, said Yu Baihui, an analyst at S&P Global Commodity Insights.