Stable growth of the Chinese economy and the development of manufacturing have become some of the reasons behind increasing domestic demand for energy resources. China has long been the world’s largest importer of crude oil.

The country’s largest oil field, located in the Xinjiang Uyghur Autonomous Region, can only partially reduce China’s dependence on foreign suppliers. In 2017, domestic production stood at 4 million barrels per day, while dependence on imports reached 69%. By 2025, projected demand in the country will reach 12–14 million barrels per day, and by 2030, 80% of crude oil will be imported.

At the end of 2018, China overtook Japan to become the world’s largest importer of natural gas. The Chinese government has high expectations for natural gas and has set a target for gas to account for 10% of the country’s energy consumption by the end of the 13th Five-Year Plan.

However, despite stable supplies from Russia and the commissioning of new LNG terminals, China may face a shortage of imported supplies. Experts expect a market deficit as early as 2020, which could exceed 90 billion cubic meters by the end of the decade.

China’s energy market is controlled by large state-owned players: Sinopec, which accounts for 46% of oil refining capacity, and PetroChina. International corporations Shell, BP and Mobil are actively involved in joint projects. A similar situation can be observed in the equipment market, where 66% belongs to state-owned companies, 19% to private companies and only 10% to foreign players.

Is There Room for New Technologies in Such a Traditional Market?

According to a recent survey, Chinese companies plan to increase spending on R&D and innovation. Given the high cost of extraction, new solutions will allow companies to improve efficiency.

Growing energy consumption will also require the construction of new infrastructure — the total length of the oil and gas pipeline network will reach 240,000 km. In this case, technologies for monitoring, repair and network management will be in demand. In particular, local companies plan to increase spending on digitalization by 60%.

The current situation in China’s oil and gas market may be considered favorable not only for major energy corporations such as Rosneft and Gazprom, but also for engineering companies and small startups.

In addition to gas and oil, Russia can now offer China technological solutions to improve the efficiency of energy extraction, transportation and processing, as well as infrastructure management. Nevertheless, success will depend not only on the quality of the solutions, but also on the speed of action, since the Chinese market attracts players from around the world. Colleagues, there is no time to lose!

The infographic was prepared by Eurasia Development Ltd.

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