China has discovered what could amount to 107 million tonnes of crude oil in its central region – a quantity equivalent to more than half of the nation’s production in 2023 – as authorities intensify efforts to enhance energy security and rely less on oil imports.
The presence of the abundant oilfield was verified while drilling in the Sanmenxia basin of Henan province, according to the state-run Henan Daily, which said the estimated size was announced by the China Geological Survey under the Ministry of Natural Resources.
“The field has the foundation for building a new oil-and-gas resource base,” said party mouthpiece CCTV, which described the discovery as a milestone in the 50-year oil-and-gas survey conducted in the province.
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Crude oil is unrefined petroleum extracted directly from the ground, and it is widely used in industries related to garments, chemicals, medicine and aerospace.
China to lead global oil demand growth in 2024 to feed reviving economy
Although China has relatively high crude oil production from a global standpoint, demand for the natural resource is very high, as China is the world’s biggest industrial producer.
China relies on overseas imports to meet more than 70 per cent of its crude oil demand, and last year it imported 564 million tonnes, representing an annual increase of 11 per cent from 508 million tonnes in 2022, according to customs figures.
Russia has also replaced Saudi Arabia as the top oil seller to China. Customs data showed that nearly 19 per cent of the country’s total crude oil imports came from Russia last year, while more than 15 per cent came from Saudi Arabia.
The United States is also among China’s top-10 crude oil sellers, with China importing 14.28 million tonnes of crude from the US last year, accounting for 2.5 per cent of total imports.
Faced with external uncertainties, the world’s biggest crude oil buyer is intensifying its quest for domestic oil sources.
While energy security has taken centre stage in policymakers’ risk-aversion strategy, some analysts expect that China’s oil demand will ease under Beijing’s push for new-energy sources.
According to the report, the oil found in Henan is light crude with no water, which makes it relatively easy to refine.
“The discovery accounts for nearly one-third of the country’s current total oil and gas production, this is a significant amount and makes it an important discovery for China, as it is heavily dependent on overseas crude oil,” said Peng Peng, executive chairman of the Guangdong Society of Reform.
Beijing’s emphasis on cultivating the “new three” – electric vehicles, lithium batteries, and solar cells – to help spur economic growth will expedite the reduction in China’s demand for crude oil, aligning with the nation’s carbon-reduction goals, Peng said.
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“Coupled with the fact that China is also exploring new types of fossil fuels, including shale gas and combustible ice, China’s oil demand will grow to a tipping point,” Peng added.
Last year, China produced more than 390 million equivalent tonnes of oil and gas, with 208 million tonnes of crude oil, according to data released by the National Energy Administration earlier this month.
According to the most recent data from the Ministry of Natural Resources, China’s oil reserves totalled about 3.8 billion tonnes in 2022, accounting for about 1.58 per cent of global reserves, and ranking 13th in the world.
The reserves amount to only 9 per cent of those of top-holder Venezuela, and 10 per cent of those of second-ranked Saudi Arabia.
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