Market Trends of China Oil and Gas Upstream Industry
This section covers the major market trends shaping the China Oil & Gas Upstream Market according to our research experts:
Offshore Segment to Dominate the Market
- China is majorly focused on offshore exploitation, exploration, and development of crude oil and natural gas fields to meet the demand. The offshore segment is the largest producer of crude oil and natural gas in China.
- China has developed new offshore exploration techniques such as the floating assemble technique with low cost and high efficiency, putting China in a leading position in erecting offshore oil platforms in the world. This is expected to increase the demand for offshore oil and gas fields.
- In May 2021, China National Offshore Oil Corporation (CNOOC) completed the deployment of a 15,000-ton offshore oil platform in the South China Sea. The platform will be used in mining oilfields of Lufeng 14-4 and 14-8, which will be included in the Lufeng oilfield group and offers oil and gas supplies for the Guangdong-Hong Kong-Macao Greater Bay Area.
- In June 2021, CNOOC's deepwater gas field commenced production capacity of 10 million cubic meters a day. The gas field, also named Lingshui 17-2, sits 1,500 meters below the sea surface in the South China Sea. The field will be able to supply 3 billion cubic meters of gas a year, or roughly 1% of China's gas demand.
- In September 2021, CNOOC Limited announced the discovery of Kenli 10-2 oilfield in Bohai Bay. The Kenli 10-2 oilfield is located in Laizhou Bay Sag in Southern Bohai Bay, with an average water depth of about 50 feet.
- Therefore, owing to the above-mentioned points, activities in the offshore sector are likely to increase and have a positive impact on the China oil and gas upstream market over the forecast period.
Understand The Key Trends Shaping This Market
Download PDF
Rising Oil and Gas Investments Driving the Market Demand
- China is the world's second-largest consumer of oil and gas and the sixth-largest producer of oil and gas globally. The China oil and gas upstream market is dominated by state-owned oil and gas companies by developing the country's domestic oil and gas exploration and production activities.
- China's natural gas production has seen significant growth with rising demand from numerous industries. Natural gas production increased to 192.5 billion cubic meters in 2020, from 176.1 billion cubic meters in 2019. This is expected to attract major investments to meet the demand.
- In order to meet the county's oil and gas demand and boost domestic energy supplies, in 2020, China's Ministry of Natural Resources announced the opening of foreign direct investments in the oil and gas industry. It aims to allow foreign companies to explore for and produce oil and gas in the country.
- In February 2021, CNOOC announced total capital expenditure in the range of USD 13.91 billion to USD 15.46 billion, with targeted net production of 545-555 million barrels of oil equivalent (Mboe).
- In March 2021, Sinopec announced to invest CNY 66.8 billion in upstream exploration, focusing on shale gas development in southwest China and the construction of liquefied natural gas (LNG) terminals in coastal areas.
- In November 2021, ExxonMobil announced the final investment decision (FID) to build a multi-billion dollar petrochemical complex in south China's Guangdong province. The Dayawan plant will produce performance polymers used in packaging, automotive, agricultural, and consumer products for hygiene and personal care.
- Hence, increasing investments from domestic and foreign firms are expected to drive the Chinese oil and gas upstream market during the forecast period.
