Rising China domestic oil output hurts import demand – by Clyde Russell (Reuters U.S. – July 22, 2013)


(Reuters) – One of the clouds hanging over the global oil demand outlook is what’s happening to Chinese consumption, with crude imports falling in the first half of 2013.

The 1.4 percent drop in imports contrasts with modest growth in implied oil demand. Such differences are often ascribed to changes in commercial inventories, which are difficult to assess accurately given China doesn’t report stockpile levels. However, another factor has come to the fore, with domestic oil production rising a fairly strong 4.3 percent over the first six months of the year from the same period in 2012.

Domestic output was 103.615 million tonnes in the first half, according to figures released on July 19 by the National Bureau of Statistics. This equates to about 4.179 million barrels per day (bpd), or about 172,000 bpd more than in the first half of last year.

This is quite a substantial jump from the figures for the first five months of the year, which showed domestic oil output rising by a more modest 2.7 percent, or 62,000 bpd. There is a risk the domestic oil figures are subject to statistical noise from month to month, however, there does seem to be a fairly clear trend of rising production in China.

Output reached a record 207.5 million tonnes in 2012, equal to about 4.14 million bpd, and based on the figures for the first half, it appears likely that 2013 will be another record year.

Part of the story is the commissioning of new offshore fields by CNOOC Ltd, including Weizhou 6-12 in the South China Sea in April and Wencheng 8-3E in the Pearl River Mouth basin in July.

The resumption of output after a spill from the nation’s largest offshore field, the ConocoPhillips-operated Penglai 19-3, in February also boosted output.

China, the world’s fourth-largest oil producer and second-biggest importer, has also managed to maintain output at aging onshore fields, such as the giant Daqing, which is producing at a steady rate of just more than 800,000 bpd.


If one assumed that China’s domestic output had been steady in the first half of 2013, rather than increasing by 172,000 bpd, it would make the import picture quite different, and far more bullish.

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