• 2 days Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
  • 2 days Statoil Changes Name
  • 2 days Tillerson just sacked ... how will market react?
  • 1 day Russian hackers targeted American energy grid
  • 1 day Is $71 As Good As It Gets For Oil Bulls This Year?
  • 3 days Petrobras Narrows 2017 Loss, Net Debt Falls Below $85bn
  • 3 days Proton battery-alternative for lithium?
  • 2 days Ford Recalls 1.38 Million Vehicles (North America) For Loose Steering Wheel Bolt
  • 1 day Oil Boom Will Help Ghana To Be One Of The Fastest Growing¨Economies By 2018!
  • 2 days Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 2 days I vote for Exxon
  • 3 days UK vs. Russia - Britain Expels 23 Russian Diplomats Over Chemical Attack On Ex-Spy.
  • 2 days Why is gold soooo boring?
  • 3 days South Korea Would Suspend Five Coal - Fire Power Plants.
  • 1 day Spotify to file $1 billion IPO
The Power Has Shifted In LNG Markets

The Power Has Shifted In LNG Markets

Analysts predict that some $8…

Will Rosneft Move Forward In The Arctic Without Exxon?

Will Rosneft Move Forward In The Arctic Without Exxon?

U.S. sanctions against Russia have…

China’s Oil Giants Continue Output-Cutting Drive

Oil storage tanks

Chinese crude oil output fell by 9.8 percent in September to 3.89 million bpd in continued efforts to rein in costs amid the persistent price rout. The total September output of the country stood at 15.98 million tons as the state-owned majors shuttered more fields where production costs remained too high to justify production.

China is among the world’s top five producers, and according to one analyst from SIA Energy, as quoted by Reuters, the current low crude prices provide a “good excuse” for the state-owned companies to curb their activities at some of the most inefficient oilfields in the country, among them Daqing – the largest in China – and Shengli, in eastern China.

Daqing, operated by CNPC, has been generating losses since the oil price slump started to really hurt. In April this year, Xinhua reported that the field had lost its operator US$740 million (5 billion yuan) in just the first two months of the year. The field has been in exploitation for six decades.

The other huge field that has been shuttered gradually, Shengli, is the property of another Chinese supermajor, Sinopec, and has also been in operation for decades. In February of this year, Sinopec shut down four sites at the field – the worst-performing ones – in a bid to curb its losses there. According to the company at the time, the shutdown would save it some US$20 million annually in costs. Last year, Shengli generated losses of US$1.4 billion.

It is a fairly plausible theory that these excessive production costs have driven China to join the negotiations of an output cut that were initiated by Saudi Arabia last month. Earlier today, the Saudi oil minister, Khalid al-Falih, said there were discussions with non-OPEC members willing to join the effort to bring oil markets back to balance in fundamental terms. Although Al-Falih declined to name any of these non-OPEC producers, China might be one of them.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News