World Energy Outlook 2007

Oil Production 3
Oil production in China was 3.7 mb/d in 2006, of which about 90% was
onshore. Output, which was flat last year after gaining about 0.5 mb/d since
the beginning of the decade, is concentrated in seven complexes, composed of
several neighbouring fields. Most of them are more than 50% depleted. The
remaining part of domestic production is therefore fragmented between many
small to medium-size fields. The biggest 11 fields, out of a national total of
492 in production, contribute close to half. Production at only one of them,
Tahe, has not yet peaked. About half of proven and probable reserves from
known fields have been produced. In the Reference Scenario, China’s
conventional oil production is projected to increase marginally, levelling off at
about 3.9 mb/d in 2012 and then declining gradually to 2.7 mb/d in 2030
(Table 10.2), as the largest existing producing fields become almost completely
depleted. 4 About one-quarter of China’s production by the end of the Outlook
period is expected to come from fields discovered recently and awaiting
development. The Jidong Nanpu field is expected to contribute a significant
share, on average 7% of conventional oil production, though the figure is very
uncertain, as reserves have not yet been fully assessed. On the basis of partial
information, we assume that production will start in 2012 and will reach an
average of about 270 kb/d following the build-up phase, with a peak at about
300 kb/d before starting to decline to about 200 kb/d by 2030. 5
The projected fall in crude oil production is offset to a large degree by increased
production from non-conventional sources – notably coal-to-liquids (CTL)
plants. The first such plant, being built by Shenhua, is expected to come on
stream in 2008. We project that CTL production will reach 250 kb/d in 2020
and 750 kb/d in 2030. The recent increase in oil prices has made
CTL production a profitable option. It is expected to be a particularly
attractive technology in China because of the availability of cheap local coal
(see Chapter 8 on Chinese policy for CTL development). 6
3. Crude oil, natural gas liquids (NGLs) and condensates.
4. These projections are derived from a bottom-up assessment of the top 11 producing fields in 2006
and new oilfield developments in the coming years and from a top-down analysis of longer-term
development prospects.
5. In the absence of any further information on geology, this is based on 7 billion barrels in place,
estimated ultimately recoverable resources of around 2.8 billion barrels and a 40% recovery factor
using primary recovery techniques.
6. The Chinese government has recently expressed doubts about the feasibility of achieving
ambitious plans for CTL production, mainly because of uncertainty about production costs, the
magnitude of coal imports and the environmental impact, including that on water resources. See the
Spotlight in Chapter 11.
320 World Energy Outlook 2007 - CHINA’S ENERGY PROSPECTS