China’s crude oil production dropped by 8 percent annually to 31.44 million tons in January and February, as high domestic production costs prompted refineries to import more crude oil, according to data by the Chinese National Bureau of Statistics (NBS).
In the first two months of this year, the total crude processing volume stood at 90.76 million tons, up by 4.3 percent compared to the same period last year.
Crude oil imports, on the other hand, rose by 12.5 percent to 65.8 million tons, Xinhua news agency reports, quoting NBS figures.
Despite the higher global oil prices at around $50 this year, compared to last year’s lows, Chinese refineries still preferred to import crude rather than buy domestically produced oil due to the high production costs, NBS noted, as reported by Xinhua.
China’s domestic crude oil output faltered in 2016, after the oil price slump pushed many of its mature and expensive fields out of the profitability range, and local producers suspended loss-making production from some of those fields.
China’s crude oil production dropped by 335,000 bpd last year, or by 6.9 percent. Even with the higher international oil prices at around and above $50 per barrel, the Chinese output is projected to further decline by another 7 percent in 2017, or by around 240,000 bpd. Related: Saudi Arabia Tries To Reassure Markets After Oil Price Plunge
The Chinese statistics bureau figures from January and February tend to confirm that forecast--Chinese crude oil output is falling, and refiners prefer to turn to imports.
Not only is Chinese production expected to drop this year, it is seen down by 7 percent by 2020 compared to the country’s previous five-year plan, due to lower production from the oldest fields. According to the economic plan for 2016-2020, China’s crude oil output is expected at around 200 million tons by 2020, equal to 4 million bpd, compared to 215 million tons from the 2011-2015 plan.
By Tsvetana Paraskova for Oilprice.com
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