Photo taken on September 27, 2019 shows equipment at Daqing Oilfield in northeast China's Heilongjiang Province. Photo: Xinhua

Weak oil prices will hurt crude production worldwide. But major oil importers such as China, India and Japan will benefit, as lower prices could help boost downstream chains, a veteran industry engineer surnamed Yuan from China National Petroleum Corp (CNPC) told the Global Times on Tuesday.

In the short run, the domestic oil industry would suffer from lower crude prices due to high costs of upstream exploration and limited feedstock inventories of downstream enterprises, experts said.

"However, if weak global oil prices last, related industries like protective equipment manufacturing, new materials, medical devices and the pharmaceutical industry could reduce production costs. That would help to accelerate investment in these sectors, thereby spurring growth of Chinese related industries," Yuan said.  

Liu Yijun, a professor of energy economics at China University of Petroleum, told the Global Times that lower oil prices will boost refined oil product consumption as the coronavirus epidemic is gradually contained and industries resume work.

Yuan noted that the benchmark Brent crude oil price, which rebounded slightly on Tuesday, could fall further due to the collapse of Saudi-Russian oil production talks and the COVID-19 outbreak in many countries, raising the risk of a global economic downturn.

To promote the stable and healthy development of the oil industry, global oil prices should increase to $60 per barrel. "Oil investment projects would be reduced if weak oil prices persist for a long time, and then the oil industry may face supply risks," a veteran economist who asked to be anonymous told the Global Times.

Clearly, weak oil prices would influence exploration and production. Yuan said that high-cost oilfields can maintain low-level operations and their crude oil can be stored temporarily.  Low- and middle-cost oilfields can maintain normal operations for energy security and stable employment.

Chinese oil companies are able to produce low-cost crude oil. Most crude oil produced by Daqing Oilfield Co can maintain an average cost of $30 per barrel. The company's annual crude oil output hit 31 million tons in recent years, and most of their crude oil can maintain low-cost production, Yuan said.

Compared with conventional oil, shale oil and tight oil have high costs of exploration and production. The cost of shale oil produced by domestic oil companies is about $100 per barrel. However, shale oil and tight oil production for now is a very small part of China's output, Yuan said.