Analysis of the status quo, progress and pattern of oil and gas exploration in China in 2021

I. Overview of oil and gas exploration

1. Classification situation

Oil and gas mainly refers to oil, natural gas, coal bed gas, shale gas, oil and gas is divided into conventional and unconventional two types, unconventional oil and gas exploitation is difficult. Among them, unconventional oil and gas refers to a class of oil and gas systems whose reservoirs, fluid characteristics and accumulation mechanism are different from those of conventional oil and gas systems, which are difficult to be discovered or exploited effectively by conventional exploration and development methods. From the perspective of exploration and development difficulty, unconventional oil and gas is more difficult than conventional oil and gas, and offshore oil and gas is more difficult than land oil and gas.

2. Exploration process

Exploration is the front link of petroleum industry, including resource search, development plan design and implementation, which is of great significance to maintain the stability of proved reserves of resources and ensure the sustainable development of petroleum industry. The exploration and development technology of oil and gas resources is based on geophysical exploration, that is, using seismic and geological information to analyze the formation structure of exploration areas, search for favorable reservoirs, and guide drilling and oilfield development. It mainly involves geological survey, seismic exploration or non-seismic exploration, drilling, logging, well completion and other services.

2. Background of oil and gas exploration and development

1. Social background

The overall effect of China's oil and gas exploration is significant, and the identified reserves of oil and natural gas as a whole show a continuous growth trend, data show that in 2020 China's identified reserves of natural gas will be 6,266,578 billion cubic meters, and the identified reserves of oil will reach 3,619 billion tons. It can be seen that China's natural gas and natural gas resources exploration potential is huge.

2. Policy background

As crude oil imports are mainly concentrated in politically unstable regions such as the Middle East, since the fall in oil prices in 2016, the dependence on imported crude oil from the Middle East has not decreased, but increased. The instability in the Middle East has further enhanced the necessity for China to increase oil exploration and development to ensure energy security. In this regard, the central government has made important instructions on domestic oil and gas exploration and development, requiring enterprises to implement the strategy of ensuring national energy security. On the whole, with the rapid growth of China's national economy and the increasing demand for energy, the relevant laws and regulations system and industry supervision system of the oil and gas exploration, development and production industry are constantly improving and developing.

Third, oil and gas exploration industry chain analysis

1. Oil and gas industry chain as a whole

The oil and gas industry chain is usually divided into upper, middle and downstream three links: the upstream link is mainly to find underground oil and gas resources and exploit them, generally divided into oil and gas exploration and development; The middle reaches are mainly used for pre-treatment (including separation of impurities such as oil, gas and water), storage and transportation of extracted oil and gas; The downstream link is mainly for refining and deep processing of oil and the sale of finished products.

2. Investment structure

The domestic oil and gas exploration and development has driven the development of oilfield engineering service market. In general, drilling engineering technical services account for more than 50% of exploration and development investment. In addition, engineering construction and production services account for about 22% and 13% of exploration, respectively, and are also important components of exploration investment.

3, downstream demand

With the continuous development of the per capita consumption level and the overall economy, as the basic energy and the demand for refined oil and natural gas continue to grow, according to the data, the apparent consumption of refined oil and natural gas in China continues to grow, reaching 341.48 million tons and 372.6 billion cubic meters by 2021, respectively. China is a large consumer of refined oil and natural gas, with a large export demand for refined oil and a large import demand for natural gas, so large-scale oil and gas exploration investment is essential.

4. Oil and gas exploration status

1. Capital investment

In terms of capital investment in China's oil and gas exploration, China's oil and gas exploration capital experienced a decline period from 2012 to 2016, and the overall investment continued to grow, reaching 82.129 billion yuan in 2019, a new high in the past decade. In 2020, under the impact of the epidemic, the capital investment decreased slightly, only 710.24%. With the introduction of domestic power rationing policy, energy problems have gradually emerged, and China has long been a major exporter of refined oil products, it is expected that there is still room for improvement in oil and gas exploration funds.

2. Market structure

In terms of the proportion of capital investment in the oil and gas exploration market, although the overall capital of oil and gas exploration in China fluctuates greatly, the proportion of the total capital of geological exploration in China shows a steady growth. According to the data, the proportion of capital investment in oil and gas exploration in China increased from 60.2% in 2010 to 82.7% in 2019, and in 2020, it is affected by the decrease of capital investment. The main reason for the small decline in the proportion of oil and gas exploration (mainly for mineral exploration) is the continuous decline in capital investment, on the other hand, it also shows that with the gradual increase in energy demand, the importance of oil and gas exploration continues to increase.

3. Exploration well situation

As far as the situation of oil and gas exploration Wells in China is concerned, the overall situation remains stable. According to the data, the number of new exploration Wells for oil and gas exploration in China from 2016 to 2020 was stable between 2700 and 3000, and 2,956 exploration Wells with a depth of 8.394,200 meters were completed in 2020, an increase of 2.1% and 2.9% respectively.

4. Seismic acquisition

Seismic data acquisition is the main method of oil and gas data and basic conditions in China at present, which can be divided into two types: 2D earthquake and 3D earthquake. Compared with 2D earthquake, 3D earthquake can obtain an additional 3D space data body. The overall technology is more complex and the data acquisition is more comprehensive. The proportion of 3D seismic acquisition length in China continues to increase, and in 2020, the length of 3D seismic acquisition in China exceeds that of 2D earthquakes for the first time, respectively 42,700 km and 30,000 km. It is expected that with the continuous development of 3D earthquakes, the proportion is expected to continue to increase.

5. Exploration progress

China's overall investment in oil and gas exploration is huge. In terms of progress, in 2020, China's conventional oil and gas exploration continues to achieve a number of new achievements in new areas and new layers, and shale gas and other non-traditional oil and gas mineral exploration has made important breakthroughs. Under the background of energy control, the progress of overall oil and gas exploration has a great impact on the overall oil and gas industry and automobiles in China.

V. Competition pattern of oil and gas exploration

1. Market concentration

Oil and gas exploration belongs to the upstream sector of oil and gas industry, and the main market is mainly occupied by state-owned enterprises. According to the exploration expenses of petrochina and Sinopec, petrochina and Sinopec account for 34.4% and 17.5% of China's oil and gas exploration funds respectively. On the whole, the current domestic oil and gas exploration is basically dominated by state-owned enterprises, mainly "three barrels of oil".

2. Analysis of major enterprises

In terms of capital investment of major enterprises, the overall exploration costs of petrochina and Sinopec show an increasing trend, reaching 24.248 billion yuan and 12.4 billion yuan in 2021, respectively, an increase of 25.4% and 27.8%, mainly due to the continuous rise in crude oil prices to drive the overall prosperity of the oil and gas industry, and the growth of enterprise investment. At present, oil and gas as the top priority of China's energy security, as the overall energy consumption continues to grow, exploration investment will continue to grow.

6. Prospect of oil and gas exploration

The oil and gas industry involves national energy security and is closely related to the lifeline of the national economy, which is highly valued and controlled by government departments. Companies wishing to enter the oil and gas exploration, development and production industry require approval and supervision from authorities at all levels. At present, the competent departments in the industry include the National Development and Reform Commission, the Ministry of Natural Resources, the National Energy Administration, the Ministry of Emergency Management, and the Ministry of Ecology and Environment. In addition, the industry self-regulatory organization for the China Petroleum and Chemical Industry Federation. China's oil and gas dependence on foreign countries continues to increase, the situation of energy security is grim, and the overall investment in oil and gas exploration is expected to continue to increase.

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