CNPC Raises Output Targets To Insulate Country From Supply-Side Shocks

2011-5-19

CNPC's strategy of increasing overseas oil production is part of a broader drive to insulate China from supply-side price shocks. If successful, this will help maintain the country's historical trade surplus.

China National Petroleum Corporation (CNPC)'s listed arm PetroChina has said that it plans to produce 3.16bn barrels of oil equivalent (boe) by 2015, almost double current levels. The move is part of CNPC's long-term strategy of insulating the country against supply-side shocks in the crude oil market that could drive up the price of oil imports.

Looking To Supply Security

CNPC's highly ambitious plans would significantly increase China's supply security. With BMI forecasting Chinese oil consumption to grow to 12.98mn b/d by 2019, dependence on imported crude oil is set to increase significantly to around 70% of total consumption. In this context, the company's strategy of boosting overseas production will allow CNPC to reduce the risk of disruption to imports as well as reducing the effects of fluctuations in the price of crude oil, which cost the country an estimated US$148bn in 2010.

If successful, the strategy will provide upside potential to BMI 's trade surplus forecasts for China. In April China registered a US$11.4bn surplus after

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