China Embarks on New Energy Quest with Major Oil and Gas Initiative

In 2023, China produced approximately 4.2 million barrels of crude oil daily, totaling 208 million tons

China's government has taken a decisive step towards enhancing the country's energy security by forming a new umbrella company to develop oil and gas reserves, including unconventional sources. This group will drill for ultradeep oil and gas and explore shale formations, aligning with China's comprehensive energy strategy. Despite China's leadership in wind and solar energy production, the creation of this new entity underscores Beijing's all-inclusive approach to energy. The company will integrate state majors like CNPC and Sinopec with industry players such as China Aerospace Science and Industry Corp, Baowu Steel, Sinomach, and Dongfang Electric Group, according to Reuters. This diverse composition aims to localize the oilfield supply chain, facilitating exploration and production.

Following a record-breaking year for Chinese oil and gas production, the action was taken. China produced 208 million tons of crude oil in 2023, an increase of 3 million tons over the previous year, at a rate of about 4.2 million barrels per day. Natural gas output reached 230 billion cubic meters, with 96 billion cubic meters from unconventional sources like shale and coalbed methane. However, developing these resources has been challenging, as seen in PetroChina's 15-year journey to commercialize Cambrian shale in Sichuan. China's pragmatic energy philosophy emphasizes no exclusion of energy sources and prioritizes local resource development. Meanwhile, the country continues to address wind and solar power utilization issues by approving higher curtailment rates to manage excess supply. Balancing renewable and hydrocarbon energy sources, Beijing's foremost goal remains ensuring robust energy security.