The China energy market is dominated by state-owned oil and gas companies. China is the world’s second largest consumer of oil and gas, but only the sixth largest producer of the same. As a big oil consumer, China's oil consumption is increasing year by year with fluctuating growth rates. However, as oil supply still cannot meet the demand, China mainly relies on imports.
Currently, a country that imports more than 50% of its oil consumption is widely considered to possess an energy security risk. With the rapid growth of China’s oil and natural gas consumption, oil and gas companies will need to boost their output to meet China’s massive energy needs and reduce the nation’s reliance on oil imports. Faced with declining domestic oil reserves, the need to improve efficiency and productivity is gaining traction with the Chinese oil and gas companies. Additionally, China has also entered into strategic partnerships with international oil and gas companies in overseas upstream projects (including in unconventional energy resources) with a view to securing future energy supply.
Recent years, the world’s major oil companies have successively announced net zero (or close to zero) strategy and have continuously increased their investments in new energy section. Natural gas which is clean, green and low-carbon products, is recognised as an important means of future energy transition and a "transition bridge" to zero-carbon energy.
The Chinese government is also promoting the use of natural gas as a clean fuel. Prices of refined products and natural gas are regulated in China, and Chinese oil and gas companies cannot pass on high oil prices to consumers. At the same time, there is a significant tax burden on producers.
National oil and gas companies in the Middle East are entering into joint ventures with Chinese oil and gas companies with a view to secure an export market for oil (for these Middle East producers) as well as penetrating the Chinese market with petrochemical products.
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