China’s crude oil production dived 8.1 percent annually in July 2016, reaching the lowest daily output since October 2011, as domestic oil companies cut investments due to the low price environment.
Last month, crude oil output came in at 16.7 million metric tons, equal to around 3.95 million barrels a day. Year-to-date, the Chinese output dropped 8.1 percent.
“Crude and coal production will post on-year drops throughout 2016 on cost concerns and government efforts to cut industrial overcapacity,” Tian Miao, an analyst at North Square Blue Oak Ltd., told Bloomberg by phone before the figures were released.
China’s oil output has been steadily dropping since the start of the year, data by the National Bureau of Statistics shows. And declines have been steeper by the month: production in March fell 3.9 percent on the year, in April the drop was 5.6 percent, in May output dived 7.3 percent, and in June – a staggering 8.9 percent.
For the first half of 2016, the Chinese oil output stood at 101.59 million metric tons, down 4.6 percent and the lowest six-month figure since 2012. The decline reflected China’s stated shift from an industry-focused economic model to a more service-oriented one. It is also related to a drive by the government to cut the country’s environmental footprint, struggling with the reputation of China as one of the most polluted places on earth. Low oil prices were also a factor in the production trend.
In June alone, state-owned giants such as PetroChina and CNOOC shuttered unprofitable fields and turned to low-cost imports instead.
In addition, PetroChina, as well as Sinopec, have forecast that their respective production would drop in 2016 because many of their oil fields were already operating at a loss, especially with the sinking oil prices in the first quarter, Reuters reports.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Russia Delays $10 Billion Rosneft Privatization Due To Low Oil Prices
- How Peak Oil Was Misunderstood
- Oil Up 4% On Saudi Rhetoric