Singapore — China’s additions of proven oil and gas reserves fell to a 10-year low in 2017 at 877 million mt (6.43 billion barrels) and 555.38 Bcm respectively, according to a notification from the Ministry of Land and Resources, indicating that the country’s capability to boost domestic output in the short term is relatively weak.
New proven oil reserves were down 4% year on year while new proven gas reserves slumped 23.6% from 2016, the ministry said in a notification dated July 13.
As a result, although crude oil prices gained 23.9% in 2017 from 2016, the country’s remaining economic recoverable reserves of crude oil edged down 0.1% year on year to 2.53 billion mt while gas reserves were down 0.5% to 3,910 Bcm, according to the ministry.
The falls were due to the sharp drop in exploration investment since 2015, the ministry added.
China’s crude production declined 4.1% year on year to 192 million mt or 3.86 million b/d in 2017, but gas output gained 8% to 133.01 Bcm, according to the notification.
The decrease in crude oil output has continued this year while the rate of increase in gas production slowed in the first half of 2018, latest data released by the National Bureau of Statistics on Monday showed.
In January-June, China’s crude oil fell 2% year on year to 94.09 million mt while natural gas production went up 4.6% from the same period in 2017 to 7.5 Bcm, NBS data showed.
The implication of the weak outlook for domestic production is that China, the world’s second-biggest energy consumer, will need to increase imports further.
“Low new proven reserves will cap output in a few years. It will be difficult to lift production immediately even when the oil price rises higher to allow increases in development investment,” said a Beijing-based source involved in the upstream sector.
COALBED METHANE, SHALE GAS
In the unconventional oil and gas sector, coalbed methane and shale gas together accounted for 68.1% of China’s total new proven gas reserves in 2017, but output of both accounted for only 10.3% of the country’s total gas production in the year, data from the ministry showed.
China continues to suffer from the lack of technology to develop these resources economically despite its aim to boost unconventional energy production.
New proved coalbed methane reserves dropped 81.8% on the year to 10.48 Bcm in 2017, while output increased 4.6% to 4.7 Bcm. Exploration and development investment in CBM surged 59.2% to Yuan 2.42 billion ($362 million), according to the ministry. Shale gas, on the other hand, attracted Yuan 9.25 billion investment for exploration and development in last year, up 5% year on year.
Output of shale gas rose 14.1% year on year to 9 Bcm, and new proven reserves stood at 367.76 Bcm, down 15.9% from 2015. The ministry did not give a figure for new proven reserves of shale gas in 2016.
— Oceana Zhou, [email protected]
— Edited by Alisdair Bowles, [email protected]
Source: S&P Global Platts
