Page 6 - AsianOil Week 44 2020

AsianOil EAST ASIA AsianOil

China pledges upstream

developments as crude imports grow

POLICY THE Chinese government has pledged to speed
up the development of the upstream and mid-
stream sectors amid a deepening dependency on
foreign hydrocarbon supplies.
The Communist Party of China (CPC) said
on November 3 it would strengthen domestic oil
and gas exploration and development while also
ramping up the construction of energy storage
and pipelines, the official Xinhua news agency
reported on November 3.
The announcement a day after the Ministry of
Commerce (MOFCOM) said it would increase
crude import quotas for the private sector by
more than 20% next year. The country’s produc-
tion has risen marginally this year while imports
have soared, even in the face of constrained eco-
nomic activity following quarantine measures
designed to limit to the spread of coronavirus
(COVID-19).
China has been on a crude oil buying spree
this year, as refiners and traders moved to overseeing the drafting of the country’s medium
take advantage of weaker international prices. and long-term economic agendas. The president
Imports averaged 11.21mn barrels per day in the has said it is “completely possible” for China to
first nine months of this year, up from 9.92mn draw level with high-income countries by the
bpd in the same period of 2019, according to end of the 14th FYP before doubling per capita
General Administration of Customs (GAC) income by 2035.
data. Production, meanwhile, averaged 3.91mn The country has launched a number of ini-
bpd compared to 3.85mn bpd in the same period tiatives over the past year aimed at bolstering
of 2019, according to National Bureau of Statis- investment in both the upstream and midstream.
tics (NBS) data. The state-controlled China Oil and Gas
Pipeline Network (PipeChina) was launched
Development agenda in December 2019 and officially took over
The CPC’s declarations are part of the Central pipelines and liquefied natural gas (LNG)
Committee’s development proposals for both the import terminals belonging to the country’s
country’s 14th Five-Year Plan (FYP, 2021-2025) biggest oil and gas companies on October 1.
as well as long-term objectives until 2035. The move brings a co-ordinated investment
Chinese President Xi Jinping, who is also strategy to the midstream while also improv-
the Central Committee’s general secretary, is ing third-party access (TPA) to critical trans-
portation and importation infrastructure.
This should also make it easier for private
investors to enter the upstream, opening up
an easier path to market for their production.
This will play a critical role in developing
a private sector upstream that can operate
independently of the country’s state-owned
majors – a stated goal of the Ministry of Natu-
ral Resources (MNR). The ministry said at the
start of the year that locally registered compa-
nies with CNY300mn ($34.76mn) of net assets
would be allowed to operate independently in
the upstream from May 1.
While little has been heard of the reform
since the announcement was made on Jan-
uary 9, which is unsurprising given the
COVID-19 pandemic, it promises to open
up China’s basins to foreign and private
companies. This is a key step towards slow-
ing the country’s ever deepening reliance on

P6 www. NEWSBASE .com Week 44 05•November•2020