China Now Produces More Oil Abroad Than At Home
China is among the most import-dependent large oil consumers, but imports, it seems, are not its only problem when it comes to oil. Apparently, production from assets the Chinese state oil companies own abroad now exceeds domestic production, increasing the country’s dependency on foreign oil.
That in itself is not the problem, writes Michael Lelyveld in an analysis for Radio Free Asia. The problem is that much of the oil produced by these foreign assets does not end up in China for various reasons, including shipping costs and the difference in revenues if it gets exported to another market rather than imported into China.
The problem with foreign oil dependence is aggravated by the fact that domestic production is falling and will continue to fall. In its latest five-year oil market forecast, the International Energy Agency estimated that China’s domestic production of crude oil will only be enough to cover 29.7 percent of demand this year, which will further slide to 25 percent by 2023.
This means that China will have to rely on imports and foreign production assets for as much as 75 percent of its demand. That’s too much for any country to feel comfortable with. Yet China does not have a lot of options, since the decline in local production is mainly a result of natural field depletion.
True, China has staked a major claim for the resources of the South China Sea, but in addition to facing territorial disputes from its neighbors there, these resources may not be as large as Beijing expects. China also has substantial shale oil and gas reserves, but these could prove to be too expensive to develop.
…click on the above link to read the rest of the article…
