China's state energy giant CNPC plans to increase its oil and gas exploration budget five times this year as the country's dependence on foreign-sourced energy commodities deepens to nearly 70 percent for oil and over 45 percent for natural gas, the South China Morning Post reports.
CNPC will spend US$740 million (5 billion yuan) on exploration to pursue the goal of reducing import dependence and it will also spend 25 more than last year on discovery evaluation.
"As energy is a lifeline of the economy, CNPC as a key state enterprise and the nation's largest oil and gas supplier, must carry out the political task of enhancing national energy security by having a sound long term resource development strategy," CNPC chairman Wang Yilin said earlier this week.
The strategy, as announced by President Xi Jinping last year, is to boost local production as much as possible. This has proved tricky because of aging fields that make production expansion costly so the state oil majors have increasingly turned their attention abroad to secure production to their name.
Still, there are still untapped reserves in China itself and earlier this month one such discovery was made in the northern Tianjin municipality. A subsidiary of CNPC announced it had struck oil at a shale formation, with the two wells drilled on the site flowing for more than 260 days.
Another shale find, in western China this time, could even spark China's own shale revolution, according to Morgan Stanley. Last month, the bank said in a note PetroChina, the listed arm of CNPC, had achieved production rates of 100 tons of crude at the Jimsar discovery, which suggests strong commercial potential.
The shale boom in China, however, would be just a fraction of the U.S. shale revolution-Morgan Stanley expects Chinese shale oil production could be 100,000 bpd-200,000 bpd by 2025, which is nothing compared to the millions of barrels of oil pumped in the U.S. every day.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More