According to China National Offshore Oil Corporation (CNOOC), China’s largest offshore crude oil production base has just completed a new 6,088-meter-deep well at Bohai Oilfields.
The first week of July 2024 is witnessing a surge in crude oil prices on the international market, with American crude oil prices reaching a record price of 87 dollars per barrel. Although the expected price ($90pb) hikes from the OPEC+ members, specifically Russia and Saudi Arabia were not achieved, oil prices continue to increase.
China although a producer of crude oil also imports large volumes of crude oil. The changes in crude oil prices on the world market largely affect the productivity of China as the country prides itself on the efficient cost of production. With the growing prices of crude oil, the cost of production might increase and this will affect the productivity of China.
China has about 8 major oil fields namely Changqing oil field, Daqing oil field, Tarim oil field, Liaohe oil field, Wushi oil field, Junggar oil field, Henan oil field, and Xifeng oil field. These oil fields account for about 4.209 million barrels per day in 2024.
The country largely imports crude oil for its local consumption. The country, in 2023 imported about 563.99 million metric tons of crude oil which averaged about 11.28 million barrels per day.
This figure shows that China produces less than half of the crude oil it imports daily. This increases the need for China to produce more crude oil domestically hence new oil fields are being explored.
The Bohai Oilfields although not the largest oil field in China, produces about 100 billion cubic meters of natural gas in the Bohai Sea.
The Bohai Sea is home to one of China’s offshore oil productions and it is managed by CNOOC and private companies such as ConocoPhillips.
Although the Daqing oil field is the largest oil field in China, the Bohai oilfield is unique as it is one of the largest privately managed offshore crude oil bases. The completion of the over 6000-meter dip drilling implies a super-deep well has been dug. Super-deep wells are wells drilled between 6000 and 9000 meters.
Importance Of This Achievement To China’s Oil Industry
With the growing geopolitical tensions among the powerhouses of the world, China a major importer of crude oil needs to position itself strategically to prevent any unforeseen circumstances. Before 2024, China largely imported its crude oil from Saudi Arabia.
However, in the first quarter of 2024, China shifted its imports from Saudi Arabia to Russia. This can be attributed to Russia’s fallout with its major trading partners in Europe, hence, a new trade alliance was formed with China.
China decreased crude oil imports from Saudi Arabia by about 16.5% and increased demand from Russia by 16.6%. This shows that China will continue to trade with a particular major oil-producing country as the country is the highest importer of crude oil. China overtook the USA as the largest importer of crude oil in 2017.
The inability of China to import crude oil will be detrimental to the economic standing of China. Currently, the country depends on the import of oil and any changes in the prices of crude oil on the international market largely impact the cost of production in China.
A higher cost of production is also highly detrimental to China’s low-cost production economy.
Secondly, needs to protect itself from crude oil wars, as most companies in the country will move to competing countries as the low-cost production in China is a major advantage that attracts more foreign firms to produce in China.
China will continue to invest in crude oil exploration to increase its average daily production to a level that increases the ability of the country to manage any shocks from the crude oil market.
Completion of the Bohai Oilfield is a major step toward the right direction for China.
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