China’s top energy companies, PetroChina, Sinopec Corp, and CNOOC Ltd, plan to boost their natural gas production despite deep spending cuts amid collapsing oil prices. China is forecast to increase gas output by 5% in 2020, half the growth in 2019 but more than double the 2.2% after the previous oil price crash in 2016.
The three companies are joining other oil and gas giants to curb spending as oil prices dropped by 56% this year due to the coronavirus pandemic. The trio have announced spending reductions of about 20% to 30%, comparable to their spending cuts in the 2015/2016 oil rout. The collapsing oil prices have forced these companies to focus on gas development while cutting expenditure on costly projects such as oil sands in Canada and shale gas in the US.
China has sought to boost its natural gas production to support its switch from coal. Unconventional resources, such as shale and tight gas, are expected to contribute to the bulk of the growth. PetroChina and Sinopec are set to speed up drilling at China’s top basins such as Tarim basin in northwest China, Sichuan in the southwest, and the Ordos in the north.
Gas output from the Ordos, China’s largest gas field, is expected to increase by 2.2% to a record 41.4 Bcm in 2020, through 1,000 new production wells. SIA Energy managing director Chen Zhu said shale and tight gas output would rise by a total 7 Bcm, representing 80% of the overall gas production growth in 2020.
The Chinese gas market is regulated in which companies are allowed to sell gas at market-driven rates while receiving subsidies to produce them. Hence, they are shielded from any downturn in oil prices. Analysts also expect that China’s top three energy firms will focus spending cuts on local oil production, allowing gas output to continue increasing.
Tags: All Feedstocks,AlwaysFreeRegister,Asia Pacific,China,English,Gas,NEA
Published on May 15, 2020 11:54 AM (GMT+8)Last Updated on September 24, 2020 11:06 AM (GMT+8)
