China's crude oil output will rise by one to two per cent this year, Yu Baocai, Vice-President of state-owned China National Petroleum Corp (CNPC), said yesterday.
The forecast is slightly below a previous estimate of two per cent given in a CNPC research report but above the 0.5 per cent growth target issued by China's planning ministry, the National Development and Reform Commission, in its 2010 economic plan.
Last year, oil output fell 0.4 per cent to 189.49 million tonnes, or 3.79 million barrels per day, according to data from the National Bureau of Statistics.
Gordon Kwan, head of regional energy research at Mirae Asset Securities, said on Friday he was expecting about one per cent growth in production this year.
"I believe the struggle with meaningful oil production growth has to do with the difficulties of finding sizable new discoveries to offset the aging fields in Daqing and Liaohe, despite higher oil exploration spending," he said.
"The era of easy oil is over."
China already relies on imported crude oil for more than half its needs and it is expected to become increasingly import-dependent in the next decade. Its annual oil consumption is second only to the United States.
Refineries run by CNPC's subsidiary PetroChina and fellow state-owned giant Sinopec Group, the parent of Sinopec Corp, have ramped up crude oil processing to record levels in the last year.
Sinopec Group will refine about 205 million tonnes of crude oil in 2010, 11.4 per cent more than the 184 million tonnes processed in 2009, Su Shulin, the general manager of the company, was quoted as saying by Xinhua news agency. Oil demand is likely to be further swell in the next few years as China seeks crude to stash in its state oil reserves, which are planned to expand rapidly in the coming decade.
Yu also said his company, China's top oil producer, forecast oil prices of $60-80 per barrel this year.
That implies China's refiners will be able to count on "normal" margins, under the country's fuel pricing system, which restricts refining margins when crude prices rise above about $80 per barrel.
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