Crude oil production in the Asia-Pacific is falling at a unique rate, according to a report from Wood Mackenzie, with China accounting for about half of the decline, Wood Mac’s Asia-Pacific upstream research director Angus Roger said.
In 2016, the region pumped around 7.5 million barrels daily but this is about to drop to less than 6.5 million bpd by 2020, Roger warned, noting that the region’s output has been falling by about 7 percent annually since the price crash of 2014.
The analyst added that the bulk of oil production in the Asia-Pacific will continue coming from large fields in China, Malaysia, and Indonesia, but these fields are already mature, which is affecting production costs and lifting breakeven points.
The report’s findings are worrying for China, which recently reported that its dependency on imported crude had deepened, reaching 64.4 percent of domestic demand in 2016. The reason for this dependency was, of course, the lower oil price, but also the fact of its superfields’ maturing, which made their output uncompetitive.
At the same time, demand is set to grow, and not just in China but also in India, which is increasingly being viewed as the new economic powerhouse of the world.
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While China has to deal with a demand projection of 12 million bpd, according to state oil giant CNPC, and mature superfields, India is on the hunt for new oil reserves in an attempt to not just ensure long-term supply of the fuel but also to rein in its own dependency on oil imports.
Last year, several Indian oil companies invested over US$3 billion in the purchase of stakes in Russian oil fields, including the giant Vankor field, the country’s second-largest.
Recently, Bloomberg reported that India’s largest refiner, Indian Oil Corp., is looking for asset acquisition opportunities around the globe, with a focus on the Middle East and Africa, in a bid to make sure that at least 1/10 of the crude it processes comes from fields it owns completely or partially.