China’s Oil Output Tanks , Hits 4 Year Low

China's crude oil output over the first half of the year stood at 101.59 million metric tons, down 4.6 percent and the lowest six-month figure since 2012, Bloomberg reports. The decline reflects 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 a 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, China pumped 8.9 percent less crude than a year earlier, with state-owned giants such as PetroChina and CNOOC shuttering unprofitable fields and turning to low-cost imports instead. Crude oil imports in January-June jumped 14 percent, China's national Bureau of Statistics said, with June recording the weakest growth.

The trend is seen to continue: an analyst from North Square Blue Oak told Bloomberg that "Domestic crude production will remain weak, while coal-output cuts may even deepen in the coming months. China's demand for overseas energy supplies including crude oil and coal will continue to grow in the second half year."

Coal output in the country was also on the decline over the first six months of the year, at 1.63 billion tons, or 9.7 percent less than the same period of 2015. Imports, however, went up, with June inbound shipments reaching the highest in over 12 months. Over the six-month period, coal imports rose 8.2 percent.

The only hydrocarbon whose production bucked the overall trend was natural gas. China's output over the first half of the year went up by 4.1 percent to 69 billion cu m. The rise will continue through the end of the year, with the annual average growth rate estimated at 13 percent, as Beijing encourages a shift from oil and coal to natural gas because of its milder impact on the environment.

By Irina Slav for Oilprice.com

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