Photo shows Keshen 605 well at the Tarim Oilfield in Aksu, northwest China's Xinjiang Uygur Autonomous Region. Photo: Xinhua

 

Chinese oil and gas imports soared in the first half of 2020, partly driven by lower international oil prices, but experts warn that the industry could face sluggish demand in the second half of the year.

Data from the National Bureau of Statistics (NBS) shows that in June China imported 53.18 million tons of crude oil, soaring 34.4 percent from a year earlier. China in the first half of the year (H1) imported 269 million tons of crude oil, an increase of 9.9 percent year-on-year, said the NBS.

In June, China produced 16.24 million tons of crude oil, a year-on-year increase of 0.7 percent, a growth rate of 0.6 percentage points lower than that of May. In H1, China's crude oil output hit 97.15 million tons, up 1.7 percent year-on-year, according to NBS.

Chinese oil fields have maintained stable operations amid the COVID-19 pandemic, so outputs in the first half year have remained relatively flat, Gu Hongjun, a senior engineer at Xinjiang Oilfield Co of China National Petroleum Corp, told the Global Times on Thursday.

Additionally, Chinese oil demand is expected to peak between 2040 and 2050, when Chinese oil output will continually increase to keep pace with demand, Gu added. 

The West Texas Intermediate (WTI) price for July stood at $40.81 per barrel, entering negative territory for the first time in April, while Brent crude for August delivery settled at $43.46 per barrel on Thursday at 14:50.

In June China imported 8.33 million tons of natural gas, an increase of 10.8 percent from a year earlier, a growth rate of 6.6 percentage points higher than that of May. In H1, China imported 48.36 million tons of natural gas, an increase of 3.3 percent year-on-year, said the NBS.

The increase of natural gas imports is driven by China's new long-term contracts with Russia and low prices in spot gas markets, Bai Jun, vice president of Research Institute of Beijing Gas Group told the Global Times.

In June, China produced 15.2 billion cubic meters of natural gas, an increase of 11.3 percent from a year earlier, a growth rate of 1.4 percentage points lower than that of May. In H1, domestic natural gas output reached 94 billion cubic meters, an increase of 10.3 percent year-on-year, said the NBS.

"Natural gas production growth will likely slow in the second half of 2020, if demand can't pick up pace," Bai warned.

Bai suggests that domestic oil companies should prepare for a rebalancing of the oil and gas market amid upstream investment contractions and a merger & acquisition push in the wake of the oil and gas price collapses when they do overseas investment and international trades.