China is increasing investment in oil exploration to limit its dependence on imports, but forecasts say domestic production will keep declining as the country's demand grows. After years of warnings, it appears that China's government is now taking the strategic implications of import dependence as a higher priority, spurred by rising reliance on foreign natural gas as well as oil. On March 6, the South China Morning Post reported that China National Petroleum Corp. (CNPC) plans to boost its exploration budget fivefold this year to 5 billion yuan (U.S. $745 million), citing an interview with chairman Wang Yilin by the company's online newsletter "China Petroleum Daily."
The increase is aimed at reversing declines in domestic oil output, which has stagnated for over a decade due to diminished returns from aged oilfields and China's difficult geology. In 2018, production fell 1.4 percent to an average of 3.79 million barrels per day (mbpd), according to the National Bureau of Statistics (NBS). At the same time, China's apparent oil demand rose 5.3 percent to 13.52 mbpd, Platts Commodity News said.