China is setting up a new entity that brings together domestic oil producers and other state-owned companies to search for ultra-deep oil and gas reserves and tackle harder-to-extract unconventional resources, the country said Monday. state energy group CNPC.
The initiative responds to President Xi Jinping’s call for the sector to have “new productive forces” that will contribute to the country’s energy security, CNPC said on its website.
Besides CNPC and Sinopec, the country’s two largest oil and gas producers, the new body brings together seven other state-owned groups, including China Aerospace Science and Industry Corp, steelmaker Baowu, equipment maker Sinomach, Dongfang Electric Group and Minmetals.
“It is about pooling wisdom and strength to jointly build an industrial chain from ultra-deep oil and gas exploration to engineering to development,” CNPC said.
The group will drill conventional resources in ultra-deep wells that extend up to 10,000 meters (6.21 miles) below the surface in places like the Tarim Basin region of northwest Xinjiang, where CNPC and Sinopec are major players. It will also seek to tap deep shale oil and coal bed gas resources.
China is the world’s largest importer of crude oil and relies on imports for almost three-quarters of its needs. It has invested billions of dollars to keep its domestic crude oil production at more than 4 million barrels per day, a level deemed necessary to fuel manufacturing and military services.
Years of efforts by the state’s oil majors to drill deeper onshore and accelerate the development of offshore oil fields have resulted in production growth of 2% per year since 2018.
That said, public companies must face the decline in production from large mature deposits. They also face the geological and financial challenges of shale oil and gas extraction.
