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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Chinese Oil Production Hits Record Low

oil patch

Ageing fields and high production costs dragged down China’s domestic crude oil production in January and February, on par with the lowest level on record according to Chinese government data.

In the first two months of 2018, China’s crude oil production dropped by 1.9 percent from the same period last year to average 3.76 million barrels per day, according to Reuters calculations of data by China’s National Bureau of Statistics. The production level in January and February equaled the lowest on record since at least 2011, a level which was hit again in August last year.

Much of the production decline so far this year could be attributed to the drop in production of China’s largest oil producer, China National Petroleum Corp (CNPC), whose production fell by 1.6 percent year on year, a source with direct knowledge of the matter told Reuters on Wednesday.

CNPC has reduced production at some oil fields and expects domestic production to gradually decline, according to the source.

The top Chinese oil producer will target to pump 100 million tons of crude oil—equal to around 2 million bpd—this year, flat compared to 2017, Reuters’ source said.

Last year, CNPC’s major oil field Daqing saw its production drop by 7 percent compared to 2016, as CNPC’s unit PetroChina, the operator of the field, scaled back oil production due to high costs, despite the rise in oil prices. Related: OPEC Deal In Jeopardy As Iran And Saudi Arabia Square Off

While Chinese domestic production equaled a record low level in January and February, refinery throughput increased 7 percent on the year to 11.56 million bpd—the third-highest on record as demand for fuel was apparently high ahead of the Lunar New Year festival in February.

The declining domestic production and the higher refinery runs highlight the fact that China is growing increasingly dependent on oil imports and is increasingly influencing global oil trade and markets. In addition, production from assets that Chinese state oil companies own abroad now exceeds domestic production, increasing the country’s dependency on foreign oil.

By Tsvetana Paraskova for Oilprice.com

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  • John Brown on March 14 2018 said:
    This article may be the most important and significant you can read. As the USA become increasingly independent of foreign oil and gas, with lots of options for obtaining what it needs in its own backyard, China is rapidly becoming more and more dependent on imported oil and gas. That means the USA is becoming more strategically secure, and China is becoming increasingly vulnerable. That massive economy, and all those factories would grind to a halt throwing tens of million out of work, even hundreds of millions in a very short period of time if any major portion of China's imported energy became unavailable, and while China is growing the USA still has the worlds most powerful navy and would be wise to keep it. In places like the South China Sea, China should reconsider what its currently doing. Every drop in domestic production is more that China has to import, mostly by water, in very slow moving and easy to spot ships. It would appear the USA is becoming much more secure at the same time that China is becoming much more strategically vulnerable?

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