China Petroleum

Note: Just now an alumnus of mine from Korea asked me several questions about China oil industry. I tried my best answer them. Then I had the impulsion to write a post to introduce China oil industry very briefly.

In Chinese, petroleum is called 石油 (pronounced as shi2 you2). What the name implies the rock oil (oil from the rock). The oil history of China could be traced back to 4th century A.D. or earlier. At that time, it was called as rock paint, or rock fatty water. In the book named Dream Pool Essays, the author Kuo Shen named it as rock oil. People drilled the oil well and transport the oil using bamboo poles.

With the development of modern industry, the oil industry of China did not make any progress until the mid 1950s. Before the Daqing oil field in Northeast of China was discovered, China was called an oil-poor country. In fact, the oil industry of China initialed from Yumen Oilfield, which locates in Xinjiang Uygur Autonomous Region, northwest of China. In 1955, the Department of Petroleum Industry was founded. Until the year of 1963, after the Daqing Oilfield’s discovery and production, the oil production could meet the domestic needs. Afterwards, China discovered North China Oilfield, Dagang Oilfield, Shengli Oilfield, and Liaohe Oilfield. In 1976, the annual oil production reached 100000000 tons, half of which was provided by Daqing Oilfield. From 1973, China began exported oil to Japan and other countries. The Department of Petroleum Industry was revoked in 1975 and re-established in 1978. Ten years later, China National Oil Corporation (CNPC) took placed of the Department of Petroleum Industry, which also covered China Petrochemical Corporation (SinoPec, founded in 1983). China National Offshore Oil Corporation (CNOOC) was founded in 1982. CNPC focused on upstream business while SinoPec ran the mid- and downstream business. In 1998, the original CNPC was separated into CNPC Group and SinoPec Group. Then, China had three oil giants. Later, each group has their E&P and refinery subsidiaries listed on New York Stock Exchange, Hongkong, or other places respectively as PetroChina, SinoPec, and CNOOC. After the split, CNPC owns 12 oilfields, 14 refineries and 5 marketing compaies, while SinoPec holds 12 oilfields, 22 refineries, and 5 production and 1 oil company belonged to East Union Petrochemical. Besides, oil companies and oil stations belonged to 13 provincial level regions were given to CNPC, and oil companies and oil stations belonged to the rest 22 provincial level regions were given to SinoPec. Then, both of them became integrated oil companies1. The detail information about them could be found on their official websites.

The statistic data shows that in 2009, the apparent oil consumption of China is 408.375 million tons, and the net import oil rate is 218.885 million tons. More than 50% of oil is imported. The import dependence ratio is increasing due to increasing needs and decreasing domestic production. From this sense, China is an oil-poor country really. Thus, those three oil giants of China are taking active part in purchasing oversea oil and gas assets.

China also has several universities or colleges which run the petroleum programs, such as China University of Petroleum (Beijing and Shandong), Northeast Petroleum University (formerly was Northeast or Daqing Institute of Petroleum), Southwest Institute of Petroleum, Changjiang University (formerly was Jianghan Institute of Petroleum), Xi’an Shiyou University, and so on. Chinese Academy of Sciences and the national oil companies also have graduate schools in petroleum industry.


1. CNPC and SinoPec were founded in Beijing on Jul 27th, 1998 (Chinese).


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