With an output of 3,938,000 barrels per day in 2016, China is the world’s fifth biggest oil producer.
Despite its significant production, rising demand led to China becoming a net importer of oil in the 1990s. By the end of 2013, the huge Asian country had become the world’s biggest net importer of oil, mostly due to its rapid economic growth.
The history of oil production in China
Oil production in China experienced a very slow start, with the limited production generally being reserved for lubricants. With some basic development, the first oil well in China managed to produce 20 barrels a day.
The Yu Men oil field acted as the cradle for China’s oil industry from around 1939. New equipment was brought in, new wells were drilled, and a number of distillation plants were constructed. This resulted in the production of 1,000 barrels of oil and 10,000 gallons of petroleum per day, although the cold weather in winter would halt production.
The oil industry later matured as the Chinese government became more concerned with ensuring adequate energy production. Once the Yu Men facility was modernized, its production reached an estimated two million tons. The oil transportation infrastructure was also improved, first with a rail link in 1956 and a pipeline in 1957.
Substantial reserves were later discovered in the Daqing oil field of Heilongjiang and the Songhua Jiang-Liao basin in the northeast of the country. The country also began exploring offshore locations. By 1973, increased production meant China could export its surplus oil to Japan. The country remained a net exporter for 20 years, until rising internal demand forced it to become a net importer in 1993.
Oil producers in China
The Chinese state-owned oil companies dominate production, although many Western companies are involved in the Chinese market. For example, Amoco (which later merged to become BP) discovered the Liuhua 11-1 field, the largest oil field in China, in 1987. ExxonMobil, which produces hydraulic oils like Mobil DTE 24, also has a substantial business presence in China.
Meeting China’s need for oil
For all its oil production, the Chinese government faces challenges in meeting the country’s need for oil. The completed Atyrau-Alashankou oil pipeline now allows China to import oil directly from central Asia, and a further pipeline has been proposed to connect the country with the Russian oilfields. In addition, the country has made high-value arrangements with major oil producing countries and invested in extracting oil from the fields of other countries, such as Indonesia.