The impact of the petroleum industry has been increasing globally as the People's Republic of China ranks seventh for oil production and second in crude oil consumption in the world. [1] [2] China became the world's largest oil importer in 2013. [2]
The impact of the petroleum industry has been increasing globally as the People's Republic of China ranks seventh for oil production and second in crude oil consumption in the world. [1] [2] China became the world's largest oil importer in 2013. [2]
The late Qing dynasty banned mining because of the traditional cosmological beliefs which regarded the land as a sacred legacy. [3] : 7 This ban was lifted during the modernization effort of the Self-Strengthening Movement as the Qing dynasty sought to develop a modern navy and modern industry. [3] : 8 In 1875, the court designated Cizhou (in what is now Hebei province) and Taiwan as testing grounds for oil extraction. [3] : 8 Qing attempts at oil exploration were hampered by corruption, low efficiency, and lack of sufficient domestic investment capacity for oil extraction and transportation. [3] : 8 The Qing court was also concerned about foreign investment and the perceived risk of selling the country to foreigners. [3] : 8
In the 1930s, gasoline replaced kerosene as China's most important petroleum product. [3] : 10 China relied on imports through the global oil companies Standard Oil, Asiatic Petroleum Company, and Texaco. [3] : 10 Imports were stored at China's treaty ports and delivered elsewhere by ship, mainly via the Yangzi river. [3] : 10
In 1949, the Yumen Oil Field was the only domestic oil field able to support industrial production and it fell far short of China's oil needs. [3] : 13 After the Nationalists' defeat in the Chinese Civil War, the oil field was transferred by the Republic of China's National Resources Commission (NRC) to the newly founded People's Republic of China. [3] : 13–14 Most of the NRC's geologists and engineers remained in mainland China and worked for the PRC. [3] : 14
Ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese government since 1949. [4]
China's first five-year plan emphasized industrial development, including nationwide geological prospecting and surveys to support that development. [3] : 19 These prospecting efforts were led by the Ministry of Geology and the Ministry of the Petroleum Industry. [3] : 19 On August 1, 1952, a division of the People's Liberation Army (PLA) was turned into China's first petroleum army and its eight thousand soldiers became the core workforce for petroleum exploration, construction, and drilling. [3] : 21
Using primarily resources from the Yumen Oil Field and Tsinghua University, the Beijing Oil Institute was founded on October 1, 1953. [3] : 21
In 1956 a rail link was built to Lanzhou; until then, the oil was transported out by truck. A pipeline was constructed in 1957. The Yumen refinery was enlarged and modernized, and by the late 1960s it was reported that production from that area was "about two million tons". [5]
In 1959, large reserves were discovered in Songhua Jiang-Liao basin in northeast China and later several other giant oilfields were found. [6] The most important is the Daqing oil field in Heilongjiang that has been the backbone of Chinese oil production for many decades. [7] The Shengli Oil Field began production in 1968 and became the second largest oil field after Daqing. [3] : 105 Many of China's other major oil deposits were also discovered during the 1950s and 1960s, and these early PRC prospecting efforts led to an independent oil industry by the time the 1960s ended. [3] : 28
The first two years of the Cultural Revolution disrupted oil production and led to a major oil shortage in 1967. [3] : 159 Daqing was one of the first places to have order restored by the military, when in March 1967, the PLA restored order there in March 1967 so that production could proceed. [3] : 159
In the late 1960s and the early 1970s, oil prospecting increased throughout the country and new fields were discovered in central China and northern China. [3] : 168 Beginning in 1968 and continuing through 1978, China's crude oil production rose sharply at an annual growth rate of 20% and China became a net oil exporter. [3] : 168
Following the outbreak of the 1973 Arab-Israeli War, oil prices rose dramatically globally. [3] : 172 Among the industrialized country, Japan was hit hardest by the resulting oil crisis because its petroleum needs were filled completely by imports. [3] : 172 It bought large amounts of Chinese oil. [3] : 172 China had also obtained commodity-backed loans from Japan to develop the Daqing oil field, and China repaid the loans with oil. [8] : 98
Beginning in 1979 (and running through 1997), the Japan Bank for International Cooperation provided China with resource loans for several oil and coal development projects. [9] : 62 These loans totaled $140 billion. [9] : 62
By 1993, internal demand for oil exceeded domestic production, and China became a net oil importer. [10] China became dependent on imported oil for the first time in its history in 1993 due to demand rising faster than domestic production. [4] In 2006, it imported 145 million tons of crude oil, accounting for 47% of its total oil consumption. [11] [12] In 2013 the pace of China's economic growth exceeded the domestic oil capacity and floods damaged the nation's oil fields in the middle of the year. Consequently, China imported oil to compensate for the supply reduction and surpassed the US in September 2013 to become the world's largest importer of oil. [2] In 2017, it became the largest importer of US oil. [13] : 275
China's land-based oil resources are mostly concentrated in the country's north. [14] : 39 Large oil fields include Daqing, Shengli, Laiohe, Karamay, and Dagang. [14] : 39
China's proven oil reserves per capita are low. [15] : 408
Province started producing in 1960, and by 1963 was producing nearly 2.3 million tons of oil. Production from Daqing declined, but in 1965, oil fields in Shengli, Shandong, Dagang, and Tianjin yielded enough oil to nearly eliminate the need of importing crude oil. In 2002, annual crude petroleum production was 1,298,000,000 barrels, and annual crude petroleum consumption was 1,670,000,000 barrels. [11]
The largest oil field in the South China Sea, the Liuhua 11-1 field – located 210 km southeast of Hong Kong in the Pearl River Mouth Basin offshore south China, was discovered by Amoco (now BP) in January 1987 in typhoon alley. [16] : 151 Water depth, the presence of heavy oil and a "very strong bottom-water drive" were among the technical challenges that had to be resolved before the oil could be extracted. [16] Amoco and Nanhai East engineering teams experimented with offshore drilling techniques, floating production, storage and off-loading system (FPSO) that would have drilling and production support. [17] By 2008, the FPSO had equipment capable of handling 65,000 bbl of oil and 300,000 bbl of total fluids per day and it would be loaded and shipped by shuttle tankers. [17]
In 2010, oil blocks in Wushi oil field (off Zhanjiang, near Hainan) began to be auctioned to foreign companies, with CNOOC having the option to increase its stake to 51% whenever required. [18]
China's $1 billion oil drilling rig, the Haiyang Shiyou 981 – owned and operated by the China National Offshore Oil Corporation – in the South China Sea, Ocean Oil 981 – began its first drilling operations in 2012. [19] [20] It led to protests and hence had to be shifted back. [21]
This shift to dependence on foreign oil has changed the exploration and acquisition policies of China. China's oil need overwhelmed its internal capabilities.
China National Offshore Oil Corp, China National Petroleum Corp, and Sinopec have largely invested in exploration and development in countries that had oil fields but do not have funds or technology to develop them. In 2004 CNOOC signed a deal to extract a million barrels of oil a day in Indonesia as well as other projects with Australia. [22]
Oil prices eased on 15 July 2024, due to weak demand in China, with Brent crude at $84.85 and WTI at $81.91. Despite supportive U.S. economic news and OPEC+ supply restraint, concerns over China's slower economic growth and refinery output weighed on prices. Middle East tensions and potential Fed rate cuts also influenced the market. [23]
By 2008, China owned less than 1 percent of the oil company BP, worth about $1.97 billion. [24]
The National Assembly of Pakistan has passed the Trade Dispute Resolution Bill, 2022 to help enhance the trust of foreign buyers in the country and provide a mechanism for exporters to file claims and complaints against their foreign clients. The bill aims to improve contract enforcement and Pakistan's ranking on the World Bank's Ease of Doing Business Index by establishing a comprehensive system for resolving disputes related to exports and imports, including e-commerce. [25]
China has one of the world's largest global strategic petroleum reserves (GSPR), which is held for national security during an energy crisis.
By 2004, China was investing in its first national oil reserve base to avoid foreign dependence. There are three different provinces in which they are focusing. The first Zhoushan, Zhejiang Province, was built by Sinopec, China's largest oil refining company. The storage space is 5.2 million cubic meters says the National Development and Reform Commission. [26] Zhejiang was originally a commercial oil transfer base. Its coastal position makes it convenient for movement purposes, although it is at the same time vulnerable to offshore violence. The next reserve of interest In Huangdao or Qingdao, Shandong Province and the final Dalian, Liaoning Province. All of these reserves are coastal and with their creation comes vulnerability to possible coastal attacks. In 2007, United Press International journalist questioned energy security, as all three of the stock oil bases were within range of Taiwanese cruise missile attacks. [26]
According to a 2007 article by state-owned China News Service, at that time China's expanded reserve would include both mandated commercial reserves and a state-controlled reserves and would be implemented in three stages to be completed by 2011. [27] The state-controlled reserves phase one consisted of a 101,900,000 barrels (16,200,000 m3) reserve to be completed by the end of 2008. The second phase of the government-controlled reserves with an additional 170,000,000 barrels (27,000,000 m3) was to be completed by 2011. [28] In 2009 Zhang Guobao, head of the National Energy Administration, announced the third phase that would expand reserves by 204,000,000 barrels (32,400,000 m3) with the goal of increasing China's SPR to 90 days of supply by 2020. [29]
The planned state reserves of 475,900,000 barrels (75,660,000 m3) together with the planned enterprise reserves of 209,440,000 barrels (33,298,000 m3) will provide around 90 days of consumption or a total of 684,340,000 barrels (108,801,000 m3). [30]
Along with an emphasis on defensive oil stocks, there is a significant push to create an offensive oil acquisition program. In March 2018, as part of a bid to establish its position as an economic superpower, China introduced a new oil benchmark. [31]
In 2004, China had to import 100 million tons of crude oil to supply its energy demand, more than half of which came from the Middle East. China is attempting to secure its future oil share and establish deals with other countries. Chinese Communist Party general secretary Hu Jintao has proposed to build a pipeline from Russian oil fields to support China's markets as well as other billion-dollar arrangements with Russia, Central Asia, and Burma, and diversify its energy sector by seeking imports from other regions of the world and by starting alternative energy programs such as nuclear. [24]
In 2009 China completed its first critical oil pipeline, the Atyrau-Alashankou oil pipeline (Kazakhstan–China oil pipeline) in Central Asia, [32] : 2–3 as part of a larger overall trade expansion with the Central Asian region which represented a trade volume of over US$50 billion by 2013, up from $1 billion in 2000. [32] : 1
The Daqing Oil Field, formerly romanized as "Taching", is the largest oil field in the People's Republic of China, located between the Songhua river and Nen River in Heilongjiang province. When the Chinese government began to use pinyin for romanization, the field's name became known as Daqing.
China Petroleum and Chemical Corporation, or Sinopec, is a Chinese oil and gas enterprise based in Beijing. It is listed in Hong Kong and also trades in Shanghai.
CNOOC Petroleum North America ULC, formerly known as Nexen, is a Canadian oil and gas company based in Calgary, Alberta.
The China National Petroleum Corporation (CNPC) is a major national oil and gas corporation of China and one of the largest integrated energy groups in the world. Its headquarters are in Dongcheng District, Beijing. CNPC was ranked fourth in 2022 Fortune Global 500, a global ranking of the largest corporations by revenue.
Petroleum production in Canada is a major industry which is important to the overall economy of North America. Canada has the third largest oil reserves in the world and is the world's fourth largest oil producer and fourth largest oil exporter. In 2019 it produced an average of 750,000 cubic metres per day (4.7 Mbbl/d) of crude oil and equivalent. Of that amount, 64% was upgraded from unconventional oil sands, and the remainder light crude oil, heavy crude oil and natural-gas condensate. Most of the Canadian petroleum production is exported, approximately 600,000 cubic metres per day (3.8 Mbbl/d) in 2019, with 98% of the exports going to the United States. Canada is by far the largest single source of oil imports to the United States, providing 43% of US crude oil imports in 2015.
The Shengli Oil Field is the second-largest oil field in China. Located in the delta of the Yellow River, it was discovered in 1961, and oil production began in earnest in 1964. Oil output quickly increased, peaking in 1991 at 33.55 million tons. While output has decreased since then, enhanced oil recovery techniques have maintained oil production at high levels, producing around 650,000 barrels (103,000 m3) per day.
Azeri–Chirag–Gunashli or Azeri–Chirag–Deepwater Gunashli is a complex of oil fields in the Caspian Sea, about 120 kilometres (75 mi) off the coast of Azerbaijan. It consists of the Azeri and Chirag oil fields, and the deepwater portion of the Gunashli oil field. An overall estimate of the area of the development is 432.4 square kilometres (167.0 sq mi). It is developed by the Azerbaijan International Operating Company, a consortium of international oil companies, and operated by BP on behalf of the consortium. The ACG fields have estimated recoverable reserves of about 5 to 6 billion barrels of petroleum. Peak oil production of 885,000 barrels per day (140,700 m3/d) was reached in 2010. However by the first quarter of 2024 production had fallen to 339,000 barrels per day (53,900 m3/d), or approximately one-third of peak value, as the development continued terminal decline. As of 2021, ACG oil accounted for 95% of all Azerbaijani oil exports.
United States energy independence is the concept of eliminating or substantially reducing import of petroleum to satisfy the nation's need for energy. Some proposals for achieving energy independence would permit imports from the neighboring nations of Canada and Mexico, in which case it would be called North American energy independence. Energy independence is espoused by those who want to leave the US unaffected by global energy supply disruptions and would restrict reliance upon politically unstable states for its energy security.
The Bouri Offshore Field is part of Block NC-41, which is located 120 kilometers (75 mi) north of the Libyan coast in the Mediterranean Sea. It was first discovered in 1976 at a depth of 8,700 feet (2,700 m) and is estimated to contain 4.5 billion barrels (720,000,000 m3) in proven recoverable crude oil reserves and 3.5 trillion cubic feet (99 km3) of associated natural gas with an annual production potential of 6 billion m³. Bouri is considered the largest producing oilfield in the Mediterranean.
The petroleum industry of Ghana is regulated by the state-owned Ghana National Petroleum Corporation (GNPC) and administered by the state-owned Ghana Oil Company (GOIL).
As of 2017, Azerbaijan produced a range of metals and industrial minerals, including aluminum, bentonite, copper, gold, iodine, limestone, silver and steel.
Petroleum has been a major industry in the United States since the 1859 Pennsylvania oil rush around Titusville, Pennsylvania. Commonly characterized as "Big Oil", the industry includes exploration, production, refining, transportation, and marketing of oil and natural gas products. The leading crude oil-producing areas in the United States in 2023 were Texas, followed by the offshore federal zone of the Gulf of Mexico, North Dakota and New Mexico.
Oil reserves in Canada were estimated at 172 billion barrels as of the start of 2015 . This figure includes the oil sands reserves that are estimated by government regulators to be economically producible at current prices using current technology. According to this figure, Canada's reserves are third only to Venezuela and Saudi Arabia. Over 95% of these reserves are in the oil sands deposits in the province of Alberta. Alberta contains nearly all of Canada's oil sands and much of its conventional oil reserves. The balance is concentrated in several other provinces and territories. Saskatchewan and offshore areas of Newfoundland in particular have substantial oil production and reserves. Alberta has 39% of Canada's remaining conventional oil reserves, offshore Newfoundland 28% and Saskatchewan 27%, but if oil sands are included, Alberta's share is over 98%.
Within the petroleum industry, proven crude oil reserves in the United States were 44.4 billion barrels (7.06×109 m3) of crude oil as of the end of 2021, excluding the Strategic Petroleum Reserve.
Sources include: Dow Jones (DJ), New York Times (NYT), Wall Street Journal (WSJ), and the Washington Post (WP).
Libra oil field is a large ultra-deepwater oil prospect located in the Santos Basin, about 230 kilometres (140 mi) off the coast of Rio de Janeiro, Brazil, north of Tupi field. Libra is in the process of being tested and may turn out to be the largest pre-salt find in the basin, ahead of the Tupi oil field, making the largest find since Cantarell Field in 1976. National Agency of Petroleum (ANP) officials are confident Libra will contain even more recoverable oil than Franco oil field.
Iran is an energy superpower and the petroleum industry in Iran plays an important part in it. In 2004, Iran produced 5.1 percent of the world's total crude oil, which generated revenues of US$25 billion to US$30 billion and was the country's primary source of foreign currency. At 2006 levels of production, oil proceeds represented about 18.7% of gross domestic product (GDP). However, the importance of the hydrocarbon sector to Iran's economy has been far greater. The oil and gas industry has been the engine of economic growth, directly affecting public development projects, the government's annual budget, and most foreign exchange sources.
China National Offshore Oil Corporation, or CNOOC Group, is the third-largest national oil company in China, after CNPC and China Petrochemical Corporation. The CNOOC Group focuses on the exploitation, exploration and development of crude oil and natural gas in offshore China, along with its subsidiary COOEC.
The Buzzard Oil Field is an oil field located in the North Sea Blocks 19/10, 19/5a, 20/6 and 20/1s. It was discovered in 2001 by PanCanadian, and developed initially by PanCanadian's successor EnCana and then by Nexen. The oil field was initially operated and owned by Nexen which is now a subsidiary of China's CNOOC.
The petroleum industry in Syria forms a major part of the economy of Syria. According to the International Monetary Fund, before the Syrian Civil War, oil sales for 2010 were projected to generate $3.2 billion for the Syrian government and accounted for 25.1% of the state's revenue.
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