China has opened up oil and gas exploration and production (E&P) activities on its territory to private companies and foreign groups with net assets of at least CNY300m (US$43m) as of May 2020. Mining permits will be awarded for 5 years through tenders and competitive bidding and may be extended for another 5 years, pending a 25% reduction of the approved area; this measure is aimed at forcing state oil and gas companies, which control most of the prospective zones, to cede some acreage. Previously, international companies were required to enter into partnerships with a Chinese company to conduct E&P operations in China. This market opening is expected to attract investors and to boost domestic oil and gas production.
China is a major oil producer, with about 194 Mt in 2018. Oil production increased by an average of 2%/year between 2000 and 2015. Since then, it dropped by 2.5%. Most of the production is onshore (90%) and located in the fields close to the north-eastern coast (Daqing and Shenghi). Offshore production is in full development, with the basin of Bohai (where CNOOC, PetroChina, Kerr-McGee, ConocoPhillips, Chevron Texaco and Shell operate) being one of the most active areas. However, China currently imports around 70% of the crude oil it refines and almost 50% of its gas demand and it aims to boost its domestic oil and gas production to reduce its import dependency.
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