China's crude oil production dived 8.1 percent annually in July 2016, reaching the lowest daily output since October 2011, as domestic oil companies cut investments due to the low price environment.
Last month, crude oil output came in at 16.7 million metric tons, equal to around 3.95 million barrels a day. Year-to-date, the Chinese output dropped 8.1 percent.
"Crude and coal production will post on-year drops throughout 2016 on cost concerns and government efforts to cut industrial overcapacity," Tian Miao, an analyst at North Square Blue Oak Ltd., told Bloomberg by phone before the figures were released.
China's oil output has been steadily dropping since the start of the year, data by the National Bureau of Statistics shows. And declines have been steeper by the month: production in March fell 3.9 percent on the year, in April the drop was 5.6 percent, in May output dived 7.3 percent, and in June - a staggering 8.9 percent.
For the first half of 2016, the Chinese oil output stood at 101.59 million metric tons, down 4.6 percent and the lowest six-month figure since 2012. The decline reflected 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 the 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, state-owned giants such as PetroChina and CNOOC shuttered unprofitable fields and turned to low-cost imports instead.
In addition, PetroChina, as well as Sinopec, have forecast that their respective production would drop in 2016 because many of their oil fields were already operating at a loss, especially with the sinking oil prices in the first quarter, Reuters reports.
By Tsvetana Paraskova for Oilprice.com
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Comments
Here is what I know. If the oil glut is now being questioned with OPEC producing full out, SA at all time highs of 10.5 million day etc, then we will next see the consequences of failure to make capital investments. We will see 100 bbl in late 2017 because there is nothing that can make up for the ongoing increased demand and the ongoing depletion of new production. Get ready for the ride