General Ideas and Strategic Emphases of China's Petroleum Industry Development

According to the analysis of oil and gas resources and business environment, the strategic positioning of China's oil and gas development should be: centering on the country’s goal of building a well-to-do society, we must continue to implement the principle of “establishing a foothold in China, expanding internationally, developing both oil and gas, implementing conservation, and establishing reserves”. Based on the exploration and development of domestic petroleum resources, while maintaining and increasing domestic oil production, China has made great strides toward the world, making full use of two resources and two markets, and establishing a global oil and gas supply system to meet the growing demand of China's economy for oil and gas resources.

Based on the domestic market-based on domestic oil resources exploration and development, under the conditions of reasonable reserve replacement and storage and production structure, we will strive to increase oil production and ensure the basic needs of domestic oil. By 2020, we will strive to achieve a domestic oil security level of around 50%.

Exploiting International - Put the national oil and gas strategy under the global backdrop, actively participate in sharing foreign oil and gas resources, actively enter the oil trading market, develop international oil and gas trade through various means, and establish long-term security, stability, and all-around The multi-channel overseas oil and gas production bases and supply channels effectively compensate for the domestic oil and gas supply and demand gap.

Oil and Gas Simultaneously - Put natural gas at an equally important position in relation to petroleum, speed up the development and utilization of natural gas, and gradually improve the energy structure. We will strive for a period of about 10 years to increase the share of natural gas in China’s primary energy consumption structure from the current 2.8% to more than 10%.

Accelerate conservation - Adhere to the principle of open-source investment and cost-cutting, give top priority to conservation, curb unreasonable oil and gas consumption, and increase energy efficiency. We will strive to support the rapid development of the national economy with less oil and gas consumption.

Establishing reserves - Gradually establish a national strategic oil reserve, regulate domestic supply and demand, stabilize fluctuations in oil prices, enhance the ability to respond to emergencies, and ensure the security of national oil supplies.

According to the distribution characteristics of China's resources, we should follow the development strategy of tapping the submarine in the east, extending the stable production period, increasing investment in the western region, and realizing the increase of storage and production. We must achieve “four combinations” in strategic deployment, namely, stabilizing the east and developing the west, and developing the sea. Combine the importance of combining petroleum with accelerating the development of natural gas; developing domestic oil and gas industry and expanding foreign oil and gas supply; combining development and production with the use of oil resources.

I. Petroleum Development Strategy

(1) Strengthen the eastern region's fine exploration and development and strive to maintain stable production of crude oil. The eastern region is China's most important oil production and supply base. It has concentrated a number of major oil fields and its crude oil production accounts for more than 70% of the country's total. However, most of the oil fields have entered the late stage of development. It is necessary to strengthen fine exploration and development and stabilize crude oil production. According to the evaluation data of oil and gas resources, the exploration potential of eastern resources is still large, and it will remain China's major oil production area in the future.

The first phase of oil development in the region will focus on deepening the fine exploration of old areas and using the rich oil and gas sag as the main target of exploration. With the aim of finding available high-quality reserves, new oil and gas blocks will be sought using new theories, new technologies, and new methods. And oil-bearing formations, focusing on rolling exploration and secondary exploration work in the Songliao and Bohai Bay Basins, expanding oil-bearing areas and exploration results, and increasing oil and gas reserves; second, improving oil recovery and comprehensive adjustment of developed oil fields. To improve secondary oil recovery as a means, actively explore and adopt tertiary oil recovery technologies, increase economically recoverable reserves, raise the rate of utilization of difficult-to-recover reserves, and extend the stable production period of oil fields.

(2) Strengthen the exploration and development of western oil and strive to build an important strategic replacement area. At present, the proven rate of oil resources in the western region is 15 to 30 percentage points lower than that in the Songliao Basin and the Bohai Bay Basin. It is in the early stage of exploration and has great potential. Accelerating the exploration and development of petroleum in the western region and striving to achieve new breakthroughs and early realization of the replacement of resources will be of great strategic significance in safeguarding China's oil security.

The distribution of oil and gas resources in the west is relatively concentrated, and the petroleum geological conditions in the major basins are complex, which determines the phased growth of reserves. Therefore, exploration must focus on continuous discovery and use new ideas to understand complex geological conditions. We will continue to implement exploration deployment in accordance with the principles and strategies for highlighting oil exploration and risk exploration, strategic breakthroughs, and strategic preparation. The Ordos, Junggar, Tarim, Sichuan, Qaidam basins were the main exploration targets, and there were major breakthroughs and major discoveries. In terms of development, deep-seated and characteristic technologies will be applied to expand the production capacity of crude oil in a timely manner. As soon as possible, a few 300-500 million tons of large oil fields or oil fields will be found in the Ordos Oil Region and the Xinjiang Oil Region.

(3) Strengthen exploration and development in the sea area and realize the rapid development of offshore oil at an early date. The 11 large and medium-sized basins in the East China Sea, Bohai Bay, Pearl River estuary, and Beibu Gulf account for more than 24% of the country's total resources. By the end of 2002, a total of 390 million tons of recoverable oil reserves were discovered. On the whole, the proven degree of offshore oil resources is only 7%, and the replacement rate of reserves has reached 157%. In particular, the discovery of large-scale oil fields such as Penglai 19-3 has enabled the Bohai Sea to exhibit a vast exploration and development landscape. The most recent strategic priorities are to strengthen petroleum exploration and development in the Bohai Sea, South China Sea and the East China Sea, and strive to increase reserves. Second, we must use proven reserves reasonably and effectively, and in particular accelerate the development of large-scale oil fields and rapidly increase crude oil production.

Second, the development strategy of natural gas

According to the distribution of China's natural gas resources, in the next 10 to 15 years, the tasks for the development of China's natural gas industry are: (1) To establish a large-scale natural gas production base with a reserve of a few trillion cubic meters on the ground in the central and western regions; (2) The offshore areas of the South China Sea and the East China Sea and Bohai Sea should be established, and efforts should be made to form bases for natural gas reserves and production growth in offshore waters; (3) To plan in an integrated manner and in accordance with the principles of integration of upstream natural gas exploration and development, middle-stream gathering and transportation, and downstream market utilization; The deployment will gradually form a natural gas industrial system promoted by the upper, middle, and lower reaches; (4) At the same time, we must adhere to the structural optimization strategy of “gas-for-oil-gas-to-gas-generating” and promote the proportion of natural gas in China’s primary energy consumption structure from 2.7% in 2002. It rose to about 12% in 2020. We will strive to produce 80 billion cubic meters of natural gas by 2010 and 130 billion cubic meters by 2020. We will stabilize natural gas supply, diversify gas sources, network transmission and distribution, and standardize the market.

The focus of natural gas development strategy is: (1) Based on the central part. The Sichuan and Ordos basins in the central part of China have superior gas-generating geological conditions, low oil and gas, and an oil-gas yield equivalent ratio of 0.57:1, which is an important area for natural gas storage and production in the near future. The scale of natural gas consumption in the central region has reached 8 billion cubic meters per year, and it is adjacent to industrially developed areas in the east. Therefore, it is of great significance to strengthen the exploration and development of natural gas in the central region.

Chuanyu District has proven gas reserves of 445.6 billion cubic meters, which is China's largest natural gas production base. In terms of exploration, we will continue to maintain growth in reserves; in terms of development and utilization, we will establish a natural gas chemical industry base through the "Chuan-Wei East (Zhong-Wu-Dong) project, and promote the sound development of Sichuan gas from production, gathering and transportation to application. cycle.
China Chemical Network sorted out Ordos gas area has now proven natural gas recoverable reserves of 583.4 billion cubic meters. Of the five gas fields in China with proven reserves exceeding 100 billion cubic meters, except for the Kela No. 2 gas field, the rest are concentrated in the Ordos Basin. The region spans five provinces and autonomous regions of Shaanxi, Gansu, Ning, Meng and Jin and belongs to underdeveloped regions. The focus for the future is to ensure the supply of natural gas in Beijing, the Bohai Rim and Xi'an, Yinchuan, etc., as well as the West-East Gas Pipeline.

(2) Develop the western region. Including the Qaidam, Tarim, Junggar, Tuha and other basins, the proven reserves of natural gas are 636 billion cubic meters, among which are Kela 2, Dilla 2, and Sebei. Although the geological conditions are complex and the oil and gas burial depth reaches 3,000 to 5,000 meters, it is still in the early stage of exploration and the probability of large-scale oil and gas fields is large. It is the main strategic replacement area for China's oil and gas industry. The strategic focus in the future is to ensure that there are sufficient natural gas sources for the West-East Gas Pipeline and the Shi-Ning-Lan Gas Pipeline.

(3) Strengthen the sea. The natural gas resources in China's sea areas have broad prospects and unique advantages near the economically developed areas along the southeast coast. We should make full use of natural gas resources such as Xihu sag and the Bohai Bay Basin in the western South China Sea and the East China Sea Basin, strengthen exploration and development, actively cooperate with the construction of natural gas pipeline networks, explore the downstream utilization market, and turn resource advantages into economic advantages as soon as possible. In particular, it is necessary to develop the Yinggehai-Qiong Southeast waters area as one of the major bases for natural gas reserves and production growth in China’s offshore areas, and actively develop natural gas in the East China Sea and the Bohai Sea. We will strive to accumulate more than 1 trillion cubic meters of natural gas reserves and 20 billion cubic meters of gas in China's offshore waters by 2010.

(4) Accelerate the construction of gas pipeline networks. Focusing on the six major gas-bearing basins in Ordos, Tarim, Sichuan, Qaidam, Yinggehai-Qiongdonghai, and East China Sea, the National Natural Gas Pipeline Network is built according to the principle of “reasonable layout, comprehensive planning, far, near, and integration”. Changes in China are basically a single gas source for a single user, lack of sufficient supporting peaking capacity of gas transmission. The natural gas consumer market is mainly concentrated in the economically developed regions in the central and eastern regions. Therefore, China's natural gas supply system should form an overall pattern of transportation from the East China Sea, the South China Sea to the southeast coast, and the western region to the central and eastern developed areas. At the same time, it is actively building gas transmission from Russia to the northeast and from Kazakhstan to Central Asia to the northwest. The trunk line gradually forms a natural gas pipeline network that runs north and south, crosses the east and west, and connects overseas.

Third, the international business strategy

At present, the world's oil resources and production are still in a rising stage. Supply exceeds demand, and supply is diversified. China's neighboring countries are rich in oil resources, with Russia in the north, Central Asia and the Middle East in the west, Southeast Asia and Australia in the south, and South America in the east. Using peripheral geopolitics will help China accelerate the development of overseas oil business.

The goal of China's oil internationalization operation is to gradually establish a long-term stable and diversified global oil and gas production and supply base, and strive to achieve a 1/3-1/2 ratio of overseas oil and gas equity production in the volume of oil and gas imports.

(1) Actively carry out foreign direct oil investment. It adopts mergers and acquisitions, holdings, and other methods to participate in foreign oil exploration and development, with emphasis on North Africa - West Africa, the Middle East, South America, Central Asia - Russia, Asia Pacific and other regions to form a certain scale of overseas oil production and supply bases;

(2) It is to expand the international oil trade. In terms of sources, the import of oil from the Middle East region should be appropriately reduced, and imports from Central Asia, Russia, and other countries should be increased. In terms of trade methods, short-term contracts and spot transactions should be changed, and as much as possible medium-long-term contracts, futures trade, and tenders should be used. In terms of species, not only crude oil but also pipeline natural gas, LNG, and refined oil are imported; in terms of import channels, they actively open up land passages and actively promote Russia’s Angarsk-Daqing oil pipeline; actively building Russia’s east Siberia - gas pipelines in northeast China and Bohai Rim; active construction of Kazakhstan- Xinjiang oil pipelines.

(3) It is a multilateral cooperation system for energy security in Asia Pacific. From the perspective of oil and gas geopolitics, we must strengthen the cooperation between resource and consumer countries, make full use of the role of the "Shanghai Cooperation Organization," strengthen cooperation with Russia and five countries in Central Asia, and attach importance to cooperation with Japan and South Korea in Northeast Asia. To increase understanding and reduce conflicts in cooperation and resolve bilateral issues in trust. At present, there are many considerations in this regard, including the construction of oil and gas pipelines in Central Asia-China-Japan, Russia's East Siberia, China-Korea-Japan, and Russia's Western Siberia-China, with oil and gas transportation networks and oil and gas interests as the link. We will closely link countries with different systems and attract multinational corporations to participate in the construction and operation of pipelines so as to ensure the common interests of oil consumers in Northeast Asia.

(4) It is to develop sea power. The state must maintain long-term and stable maritime trade interests through the development of maritime rights, and increase its actual influence or control over the development of marine oil and gas resources within the scope of sovereignty.

Fourth, the national oil reserve strategy

The major consumer countries in the world not only open up many oil production and supply bases, but also establish large reserves to stabilize supply and demand, stabilize market prices, and respond to emergencies. The U.S. oil reserve is 4 months, and Japan is 3 months. The IEA stipulates that the 90-day net import volume is the standard for oil reserves. At present, there is no strategic petroleum reserve in China. The existing crude oil and refined oil storage tanks are enterprise reserves and cannot be used as a strategic reserve function.

China's "15th Five-Year Plan" clearly stated: "Establish a national strategic oil reserve and maintain national energy security." The national oil reserve was formally launched this year. The first-stage construction of the first-selection will take place in Dalian and Qingdao Huangdao. It is expected that by the end of 2005, 16 million cubic meters of reserve will be built. To establish a national strategic oil reserve system, a combination of national reserves and corporate reserves should be implemented, and a national reserve-based policy should be adopted to strive to build a national strategic reserve capacity equivalent to 90 days of oil import volume. National reserves are directly controlled and managed by the central government to ensure stable supply; corporate reserves are used for the production and operation of revolving oil reserves. National reserves and corporate reserves should be strictly separated to ensure the accuracy and quality of the oil in the national reserve pool.

V. Savings and Alternatives

At present, China's oil utilization efficiency is obviously low. According to statistics, China’s oil consumption per thousand US dollars of GDP is now 0.26 tons, which is 3.3 times that of Japan, 2 times that of the United States, and 1.2 times that of India. This shows that China’s potential for improving oil and gas use efficiency and reducing oil consumption is very high. Appreciably, we should devote ourselves to a new way of low consumption and energy-saving oil consumption. In the long run, in order to solve the problem of China's oil supply shortage, it is necessary to actively adopt an oil substitution strategy, which mainly includes: rationally developing and using domestically produced high-quality coal as an alternative to petroleum; accelerating the development of nuclear power instead of oil; and endeavoring to cultivate natural gas utilization markets and increase natural gas production. Substitute oil; actively develop CBM industry to replace oil.

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