In recent years, China’s oil industry has been moving in a direction that stands out globally — production has been climbing steadily even when international prices were weak. Normally, when oil prices fall, producers around the world scale back output to reduce losses. But in China, that hasn’t been the case, according to OilPrice.com.
A Unique Position
China is both a major producer and the largest importer of crude oil. Its government plays a dominant role in shaping the industry, with state-owned oil companies accounting for about 85% of national production.
A Look Back
Oil production in China began in the 1960s. By the mid-1990s, the country was nearly energy self-sufficient, pumping more oil than it consumed. This reduced reliance on imports for a time.
That changed in 1994, when fast-growing demand turned China into a net importer of crude. The gap has widened ever since. In 2023, China produced nearly 5 million barrels per day but consumed over 16 million barrels daily, keeping it the world’s largest crude importer.
China’s oil industry grew steadily for two decades before slumping in 2016 when global oil prices crashed. Recovery began in 2019 and continued even through the pandemic, when markets hit record lows.
Government Strategy
The push for higher domestic output is part of Beijing’s “Seven-Year Action Plan for Oil and Gas Exploration” (2019–2025). The plan emphasizes energy security through increased production and building strategic reserves in case of disruptions in global supply chains.
In 2019, rising trade tensions with the U.S. prompted President Xi Jinping to call for stronger investment in both oil and gas exploration. Soon after, the government rolled out tax cuts of up to 40% on heavy oil, scrapped import duties on certain equipment, and boosted state support for the sector.
Corporate Moves
- PetroChina nearly doubled its exploration and production spending between 2016 and 2023, with $32 billion invested in 2023 alone. Production rose about 6% versus 2015 levels, reaching around 2 million barrels per day in 2024.
- CNOOC (China National Offshore Oil Corporation) saw the sharpest gains, with output climbing 45% between 2021 and 2024 after boosting domestic exploration spending more than fourfold.
- Sinopec also reversed a long production decline, increasing output by 2% from 2021 to 2024 as it ramped up investments 2.6 times.
Technology and Aging Fields
China’s oil industry faces the challenge of aging oil fields — many in operation for over 50 years. PetroChina has successfully slowed declines using enhanced recovery techniques. At the historic Daqing oil field, for example, production exceeded 2 billion barrels between 2014 and 2023, despite starting operations back in 1960.
The Bigger Picture
China is also heavily investing in electrifying its civilian transport sector, aiming to reduce vulnerability to potential trade or supply disruptions. Yet its continued push for domestic oil production signals that conventional fuels remain critical. For now, petroleum is still indispensable for ships, tanks, and military aircraft — and Beijing isn’t ready to let go of that strategic advantage.