Page 8 - AsianOil Week 03

AsianOil EAST ASIA AsianOil
CNPC unveils exploration plans
The state-owned company has outlined its exploration investment for the year ahead and is aiming for gas to account for half of its overall output
COMMENTARY
WHAT:
CNPC will invest $725mn in exploration efforts this year as it aims to produce more than 4mn boepd.
WHY:
Domestic energy demand continues to grow, deepening China’s reliance on oil and gas imports.
WHAT NEXT:
CNPC’s focus on challenging plays in China’s west could open doors to smaller developers in the east.
CHINA’S largest oil and gas producer has out- lined plans not just to increase its output this year but also to balance it equally between crude oil and natural gas.
State-owned China National Petroleum Corp. (CNPC) said on January 14 that it would invest CNY5bn ($725mn) in exploration efforts aimed at increasing production to more than 200mn tonnes of oil equivalent (4mn barrels of oil equivalent per day) in 2020. The amount is similar to that spent in 2019, which was a fivefold increase over 2018’s CNY1bn ($145mn) investment.
Reflecting the explosion in the country’s gas consumption in recent years, the company has said it will strive to lift production of the fuel so it accounts for 50% of its overall output.
Driving domestic demand
CNPC’s increased focus on natural gas con- tinues a years-long shift by the country as a whole towards the cleaner-burning fuel. The central government has championed a shift away from dirtier coal and, to a lesser extent, oil as it seeks to reduce toxic levels of air pol- lution in its cities.
China’s consumption of gas grew by 18.1% in 2018 to 280bcm and is projected to climb another 10% in 2019 to 308bcm. The offi- cial China Daily last week cited data from the National Development and Reform Commis- sion (NDRC) as showing that gas consumption rose 9.5% year on year in the first 10 months of 2019 to 246.28bcm.
Production climbed by 8.8% year on year in 2018 to 161bcm and 8.1% in 2019 to 174bcm, according to data from the National Bureau of Statistics. With consumption growing at a faster pace than production, imports have been forced to bridge the gap. Gas purchases surged 31.8% year on year in 2018 to 124.7bcm and by a more modest 6.8% in 2019 to 127.65bcm.
China’s energy planners have set a target of raising the cleaner-burning fuel’s share of the primary energy mix from around 8% at present to 10% by the end of the year. Moreover, 2030’s target has been set at 15%.
To achieve this, while also trying to avoid sac- rificing the country’s energy security more than necessary by relying solely on imports, the cen- tral government has urged its energy developers to invest more in domestic gas assets.
“For CNPC, as well as other oil and gas com- panies, China’s increasing appetite for natural gas provides an alluring new growth momen- tum, when oil consumption growth has slowed down,” the paper quoted the head of Xiamen University’s China Institute for Studies in Energy Policy, Lin Boqiang, as saying.
China Daily quoted ICIS China’s research director, Li Li, said that developers were more economically invested in boosting gas produc- tion, when new crude reserves have been harder to find and exploit. China’s oil production pla- teaued at 3.84mn barrels per day in 2019, while imports averaged a record-breaking 10.17mn bpd. In November, imports hit an all-time high of 11.18mn bpd.
325 300 275 250 225 200 175 150 125 100
75 50 25
0
2009 2010
2011 2012
Production
2013 2014 2015 Consumption Imports
2018 2019
Data: NDRC, NBS, GAC, CNPC
China's natural gas balance
v
2016 2017
Source: BP
P8
w w w. N E W S B A S E . c o m Week 03 22•January•2020
bcm per year