China's upstream industry shifts focus to domestic natural gas

offshore-technology.com Gas 2018-07-12 10:15:00

Chinese national oil companies (NOC), CNPC, Sinopec and CNOOC, operate more than 90% of China's producing oil fields. In recent years, natural declines, mature conventional reserves as well as capital spending cuts have directly impacted China's oil production.


The decline of oil production will be partly offset by the increase of natural gas production, due to the exploration and development of the unconventional resources.


CNPC is the largest Chinese NOC and dominates China's onshore production. CNPC plans to commercialise its domestic unconventional resources and keep investing into large gas projects in Tarim, Ordos and Sichuan Basins in order to increase its total domestic natural gas production from current level at 9,500 million cubic feet per day (mmcfd) to 11,500 mmcfd by 2020, of which shale gas will account for 10%.


In accordance with government directive, Sinopec is also growing its natural gas business especially the unconventional production, which will drive its operation focus over the near term.


CNOOC is the smallest of the Chinese NOCs but dominates China's offshore sector. Its investment priority is the core domestic portfolio offshore China.


Chinese government is also committed to the oil and gas sector reform and unveiled its plan in May 2017. As a key part of the country's 13th Five-Year Plan, the new guideline highlighted opening up more acreage to independent participants to diversify investment and participation in the upstream sector.


A new mechanism will be implemented to involve the licensing of upstream blocks through a rendering system and their relinquishment upon expiry of the exploration period.


China relaxed its policy in 2014 to allow private sectors to explore unconventional resources such as shale gas, now under the new scheme, eligible companies will be able to apply for licenses to develop conventional oil and gas reserves, which used to be dominated by the NOCs. The reform is also expected to drive the growth of the natural gas market and enhance the capability of sustained energy supply.


China's upstream industry is shifting focus to domestic natural gas to meet the energy demand, which is influenced by the government policies. In the meantime, the latest reform breaks the dominance of the Chinese NOCs by inviting competitions in the upstream exploration and development.


(Writing by Jessie Jia  Editing by Harry Huo)
For any questions, please contact us by inqury@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Weekly global coal market news summary (Jul 16 – Jul 20) 2018-07-20

Coal price sets Whitehaven for record year Whitehaven Coal says it is on track to deliver "a record set of financials" this year as thermal coal prices hover at seven-year highs, thanks to s

2 China Coal Daily Track (Jul 20) 2018-07-20

Thermal coal Domestic market Production area Coal prices keep the weak run in major production provinces. In Yulin city, Shaanxi province, miners saw a general balance between produ

3 China thermal coal demand remains restrained amid rainfalls; coking coal tepid 2018-07-20

Demand for thermal coal remains restrained in China's eastern and southern coastal areas, as less thermal power is generated with recent rains boosting hydropower and utilities registering high coal s

4 Hubei power load hits new high amid hot summer 2018-07-20

Power load hit a new high in central China's Hubei province, a prime result of sustained high temperatures in China's hottest days. As of 21:25 on July 18, power load of the province's pr

5 China's thermal power sector shows sign of turnaround 2018-07-20

China's thermal power industry showed a clear sign of a turnaround, with many listed companies reporting significant year-on-year growth in profit margins over the first half year. By Jul

6 Thermal coal prices kept declining at China's N ports; trades dull 2018-07-20

Spot thermal coal price posted another modest decline at northern China's Bohai-rim ports on July 20, due to weak demand from utilities, and some traders' fire sale activities led to a chaos of offer

7 U.S. LNG exports to China decline as trade war escalates 2018-07-20

As the trade war between China and the United States escalates, fewer vessels carrying U.S. liquefied natural gas have gone to China over the past two months. China, which purchased 14% o

8 Chinese utilities reduce inquiries for import coal amid downside concerns 2018-07-20

Chinese utilities generally reduced or even halted buying import thermal coal in recent days, as most of them were concerned about possible downside caused by multiple unfavorable factors.

9 China braces for a summer power crunch as temperature surges higher 2018-07-20

The world's largest electricity producer is warning it may run short of power this summer. Parts of China are at risk of shortages as the nation's distribution networks struggle to cope w

10 China H1 medium- & long-term thermal coal contract prices average 562 yuan/t 2018-07-20

Prices of medium- and long-term contract thermal coal averaged 562 yuan/t in China during the first half of the year, down 9.5 yuan/t on the year, said a government official at the national summer coa

Most Read Articles

1 Indonesian coal ships stranded after regulating policy introduces 2018-07-10

Traders with old Tanda Registrasi and associated Ekspor Terdaftar licences to export coal since July 1, 2018 have been forbidden to do so, according to Wood Mackenzie. "Market rumours sug

2 China's Jun coal imports rise 17.9pct on robust buying demand 2018-07-13

China's coal imports climbed by 17.9% from a year earlier to 25.47 million tonnes in June, showed data from the General Administration of Customs (GAC) on July 13, as coal-fired power plants accelerat

3 China June power coal price index up 2.56% MoM 2018-07-12

China's monthly-issued price index of power generation coal increased 2.56% month on month to 528.57 yuan/t in June, rebounding from three-month falls, and 7.67% higher from a year ago, showed data

4 China's port restrictions cause berthing disruptions 2018-07-12

A wave of stricter port restrictions in south China has left steel producers searching for alternative ports to allow them to berth vessels carrying their imported metallurgical coal cargoes.

5 CHN Energy slashes Jul-term contract coal prices, sources 2018-07-11

China Energy Investment Group, also known as CHN Energy, has reduced its monthly contract prices of thermal coal for July delivery, market sources said. The coal giant asked its subsidiar

6 Rising supply, trade tensions expected to depress iron-ore market 2018-07-09

Iron ore is starting to buckle after a series of warnings that prices are set to drop as global supply rises, and as investors fret about the potential impact of escalating trade tensions between the

7 China coastal coal freights rebound as demand from utilities climbs 2018-07-09

China's coastal coal freight rates started to rebound in recent days, as shipping demand showed signs of recovery from utilities which saw rising coal burns amid hot days. Noticing that t

8 China import coal trades below expectations; offer prices mixed 2018-07-09

Few trades were heard clinched on import coal for China, with most cargoes in the hand of traders who gave varied offer prices. Low-CV Indonesian coal of 3,800 Kcal/kg NAR was offered at

9 Indonesian low-CV thermal coal prices firm amid supply shortage 2018-07-12

Coal supply from Indonesia, the world's top thermal coal exporter encountered a slowdown recently, due to continuously rainy weather, supporting prices of the power generation material to stay firm.

10 High offers crimp Chinese thermal coal import trades 2018-07-10

China's import trades of thermal coal remain tepid as foreign offers keep at a high level, even after Chinese yuan started to strengthen. Coal prices have been stable in recent days, said