We must not slacken our efforts to increase oil and gas storage and production

In the face of the complex and changeable international situation, the work of increasing oil and gas reserves and production should not be relaxed. Promoting oil and gas storage and production is a strategic choice to ensure national energy security, and is also the key to achieve the goal of "double carbon". From the perspective of resource conditions, China still has great potential for increasing oil and gas storage and production in the future, and the output and economy of unconventional natural gas are expected to continue to increase.

Under the influence of the conflict between Russia and Ukraine, oil and gas supply has become the core concern of global energy security. Recently, the National Energy Administration released data showing that in the first quarter of China's oil and gas production maintained a good momentum of increase, crude oil production increased by 4.4% year-on-year, natural gas production increased by 6.6% year-on-year, continuing to maintain the trend of stable oil and gas growth since 2019. Especially in the context of high international natural gas prices, domestic gas continues to play the role of "ballast stone", which effectively guarantees the stability of the domestic market.

Under the background of insufficient investment in international oil and gas exploration, it is not easy for China to achieve sustained breakthroughs in increasing oil and gas reserves and production. Since 2016, affected by low oil prices, domestic oil and gas exploration and development investment has continued to decline, crude oil production has declined for three consecutive years, natural gas dependence on foreign countries has risen rapidly, and national energy security risks have intensified. In 2019, the National Energy Administration officially implemented the "seven-year Action Plan" to increase storage and production in the oil and gas industry, and domestic oil companies increased exploration and development funds and scientific and technological investment, and upstream exploration results were intensively displayed, and crude oil production stopped falling. Up to now, China's crude oil production has risen for three consecutive years, and natural gas production has increased by more than 10 billion cubic meters for five consecutive years, playing a beautiful "turnaround".

However, in the face of the complex and changing international situation, the work of increasing oil and gas storage and production should not be relaxed. On the one hand, promoting oil and gas storage and production is a strategic choice to ensure national energy security. The conflict has been going on for more than two months, and the International Monetary Fund has predicted that the loss of Russian gas and oil supplies could cost the European Union 3 percent of gross domestic product. The violent turmoil in the international oil and gas market has once again sounded the alarm for national energy security. Oil and gas security is the core of energy security, and China's oil and gas dependence on foreign countries is as high as 70% and more than 40%, respectively. Only by constantly enhancing the self-sufficiency of oil and gas can we firmly hold the energy rice bowl in our own hands.

On the other hand, promoting the increase of oil and gas storage and production is the key to achieving the goal of "dual carbon". Under the "double carbon" goal, it is the general trend that oil and natural gas are gradually replaced by renewable energy, and China is in the middle and late stage of industrialization and rapid urbanization, and energy demand will maintain rapid growth in the future for a long time. Oil and gas will remain essential until renewable energy is able to take the lead. In particular, natural gas has the advantages of clean, high supply stability and low acquisition cost, and will play an important role in the process of green and low-carbon energy transition. It is predicted that around 2035, China's natural gas demand will reach more than 600 billion cubic meters, and the proportion of natural gas in the energy consumption structure will increase to about 14%. If we do not continue to strengthen the independent supply capacity of natural gas, the external dependence of natural gas will rise significantly.

In order to effectively ensure oil and gas supply, The State Council issued an action plan for carbon Peaking before 2030, proposing to accelerate the large-scale development of unconventional oil and gas resources such as shale gas, coal bed methane and tight oil (gas). Since then, the State-owned Assets Supervision and Administration Commission of the State Council held a meeting of the heads of central enterprises to emphasize once again that they should increase domestic resource exploration efforts, promote domestic oil and gas storage and production, and better play a supporting role in the production of important energy resources.

From the perspective of resource conditions, there is still great potential for increasing oil and gas storage and production in China in the future. In terms of oil, in the past three years, China's annual newly added crude oil proved geological reserves have exceeded 1 billion tons, and this scale is expected to continue; In terms of natural gas, China's unconventional natural gas resources such as coal-bed methane and shale gas are very rich, and have good exploration and development prospects. In the past five years, the proportion of unconventional natural gas (shale gas, coal-bed methane) production in the country's total natural gas production has doubled from less than 7% to about 14%. In the future, with the continuous expansion of exploration and development and the progress of engineering technology, the output and economy of unconventional natural gas are expected to continue to increase, and are expected to become an important part of China's natural gas supply in the future.