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China’s three state oil and gas companies plan to increase their spending on oil and gas by 20 percent this year, bringing the total to some US$74.4 billion (500 billion yuan) for the first time in five years.
Nikkei Asian Review reports PetroChina, CNOOC, and Sinopec sourced foreign oil to satisfy as much as 70 percent of their needs as of 2018, with natural gas dependency on imports at 45 percent. Heeding a call from Beijing to boost the country’s energy security amid ongoing tensions with the United States, the three are now seeking to increase their production both at home and abroad.
PetroChina last month said it will increase its spending by 17.4 percent this fiscal year, which the company can accommodate comfortably after it reported a 130-percent rise in net profits for financial 2018. Most of this will go into oil and gas production, at 80 percent, with the company focusing on domestic natural gas production, two LNG projects—in Russia and Canada—and the acquisition of a stake in an oil field in Abu Dhabi.
China’s second-largest oil producer, CNOOC, plans to boost spending to US$10.4-11.9 billion (70-80 billion yuan) from US$9.31 billion (62.6 billion yuan) last year.
Sinopec plans a 41-percent increase in investments this year, to almost US$12 billion (80 billion yuan) focusing on oil.
China’s oil demand is still on the rise despite short-term worry about depressed economic growth and its effect on this demand, but according to a recent report from Morgan Stanley, it will peak in 2025 as electric vehicle adoption increases. In that, the authors of the report noted, China would be unique among industrialized countries where economic growth has traditionally gone hand in hand with fuel demand growth.
For now, however, demand remains strong and the extent of China’s dependency on imports remains a cause for concern in Beijing.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.