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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