China's five-year plan targets stable oil production, increased gas and stockpiling

China announced on Thursday that it would set a target for its annual oil production of 200 million metric tonnes (4 million barrels per day) as part of its next five-year plans. This is a goal?it had already exceeded last year. The country also promised to 'expand' the size of its strategic oil reserves, which are not publicly disclosed. This target is an extension of the 2022 goal by China's National Energy Administration to increase output to 200 millions tonnes by 2025. The target is still lower than the 216 million tonnes reached last year, after a seven-year effort to reverse production declines.

The decision to prioritize maintenance over growth is a reflection of the increasing difficulty in 'pumping more oil' in a nation where mature wells are drying out, newer ones cost more and are deeper, while the geological challenges of developing shale resources are proving to be difficult.

The output is at its peak, and consumption will follow suit. China has also committed to achieving peak domestic oil consumption by 2030. This is due in part to the rapid electrification across the country of cars and trucks.

The 2026-2030 plan, which does not give any figures, calls for a steady increase in gas production through 2030.

Power of Siberia 2 Gas Pipeline, which links Russian?gasfields with northern China via Mongolia.

China will increase coal-to gas and coal-to oil production capacity and technological reserves between 2026-2030 compared to the previous five-year plans, which focused on planning and regulation of the sector.

STOCKPILING

China has been growing its "strategic" oil reserves for years and announced that it will continue to do so in the next five year period.

China's plan stated that it would "expand its oil reserves" and "build significant oil reserve projects", but did not provide any details.

Beijing is very secretive about the size of its reserves. Analysts estimate that it's around 900,000,000 barrels or just under three months worth of imports.

The new projects would be on top of the expansion or construction of reserves capacity at 11 sites between 2025 and 2026, which was first reported in October. Reporting by Sam Li, Lewis Jackson and Chen Aizhu. Additional reporting by Chen Aizhu. Editing by Clarence Fernandez and Alexandra Hudson.

(source: Reuters)