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Vertical axis in chart corresponds to thousands of barrels of oil equivalent per day.

Oil -  fossil oil produced from on and offshore reservoirs, including tight sands/shales; and liquids extracted from gas.

Gas - sales gas produced from on and offshore reservoirs, including tight sands/shales and coal beds.O

Full breakdowns are available in datafiles.

Exploration and Production

Early history

Oil and gas have been found and used in China for at least 2 millennia. During the Han Dynasty wells in Sichuan Province were hand dug to at least 200m in order to access brine with associated gas delivered in bamboo pipes to fuel fires to evaporate the brine for salt recovery.

Oil found in these wells (or in seeps elsewhere) was used in weaponry, medicine, lubricants, ink, and lighting. However, managed operations did not begin until the 1930s and it was not until the Communists had enforced stability that concerted exploration activity could begin.

China first produced significant quantities of oil (from the Yumen fields in Gansu Province) in 1939. The Karamay fields in the Junggar Basin in Xinjiang Province began to be exploited in 1956 with exploration of the Songliao basin in northeast China beginning in 1958. In 1959, Songji-3, the first oil well in the region, was drilled in the southern part of the central basin in Heilongjiang Province and the Daqing oil field, China’s largest field, started producing from here in 1960.

Petroleum exploration of the Bohai Bay basin commenced in 1955. In 1962 the large Shengli field in Shandong Province came onstream followed by the Dagang field in Hebei Province and the Liaohe field in Liaoning Province in the mid 1960s.

By 1970 production from Daqing, along with lesser quantities from these and other fields in the Bohai Bay Basin, the Ordos Basin, the Qaidam Basin, and the Sichuan Basin, had surpassed 600,000 bbls per day. The country had also begun to export oil to Japan. Meanwhile in the early 1960s the first parts of a gas infrastructure were installed in the populous northeast of the country to make use of associated gas production.

Modern history

After 1970 exploration and production activity increased rapidly with oil output rising to a peak in 2010 at over 4 mm bbls per day. Gas production grew to nearly 140 bcm a year and is still rising. Drilling numbers have increased even more rapidly with the country now capable of drilling over 20,000 wells a year. Only 1,500 wells were drilled in 1970 and a little over 8,000 in 2000. About 2% of current drilling is offshore.

Production from Daqing had grown to over 1 million barrels per day by 1978 and this stayed steady until persistent decline began around 2000. The Shengli, Liaohe and Dagang fields together managed to surpass a mm bbls per day in the 1980s but are now also slowly declining. Other significant accumulations found after 1970 in the northeast include the Huabei field located on a plateau in the central section of Hebei Province and the Zhongyuan field located on the border of Shandong and Henan Province, both discovered in 1975.

The Sichuan basin, where modern wells were first drilled in 1953, began producing gas in 1969 and the region is now the largest gas producer in China closely followed by the Ordos and Tarim Basins. New gas fields are still being exploited in Sichuan including Puguang and Yuanba and most recently Chuandongbei, which are all sustaining exports from the region.

The Changqing gas field, located in the Ordos Basin, is the largest gas field in China. It came onstream in 1995 and also produces substantial volumes of oil. Gas production from this one field peaked at nearly 20 bcm a year in 2015. Concerted gas exploration in the Tarim Basin did not begin until 1989 although some oil had been produced here since 1974. CNPC conducted comprehensive exploration between 1989 and 1995 growing output to around 16 bcm a year by 2008.

Other smaller oil and gas fields have been developed in western China. The northwest margin of the Junggar Basin has been productive since the discovery of the Karamay group of fields in the 1950s. Along with these remote producers in Xinjiang Province, the Turpan-Hami fields, onstream in 1974, deliver oil from the southern part of this basin as does the Cainan field, discovered in 1991 and put onstream in 1995. Despite intense exploration and development activity in recent years most of these fields are at plateau or declining.

Offshore history

Around 25% of China’s oil production and 14% of its gas production originates from offshore waters of which over half of the oil comes from Bohai Bay. Here offshore production began in 1977 and around 70 fields produce in shallow and very shallow waters, the largest being Penglai 19-3 which came onstream in 2002.

Further south a few fields produce oil and gas in the East China Sea, the first being Pinghu from 1998. In the more prospective South China Sea the Pearl River Mouth delta has over 30 producing oil and gas fields. Production started from this region in 1991 and peaked at around 400,000 bbls per day in 2005.

The bulk of China’s offshore gas comes from the South China Sea, onstream from 1993. The Yacheng 13-1 field lies in the Yinggehai Basin west of Hainan Island and is the largest offshore gas field in China. It came onstream in 1996 followed by the nearby Dongfang 1-1 field onstream in 2003. They supply gas to Hong Kong and Hainan.

For recent events see News Briefs.

North Asia


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News Briefs


Songliao Basin

The Songliao Basin in northeast China underlies a landscape of forests, meadows and grassland. It is bordered by the Zhangguangcai Mountains to the east, the Greater Khingan Range to the west, the Kangping-Faku hill zone to the south and the Lesser Khingan Range to the north.

These ranges comprise Pre-Cambrian and Palaeozoic metamorphics and volcanics surrounding a large Mesozoic and Cenozoic depression containing multiple sedimentary systems dominated by a deltaic sandstone sequences deposited from a provenance in the north. Fields of the Daqing and Jilin Oil Provinces produce from these stacked sandstone reservoirs.

Bohai Bay Basin

The Bohai Bay basin (also known as the North China basin) extends offshore into Bohai Bay. It is a rifted lacustrine basin formed on the basement of the North China Craton at the end of the Cretaceous.

During the syn-rift stage grabens and half grabens developed along northwest and northeast trending fault sets before becoming one large post-rift basin during the late Oligocene. Sediments were deposited in a lake setting within the grabens. The post-rift sediments are dominated by fluvial deposits.

The basin includes 6 sub-basins; Liaohe, Bozhong, Jiyang, Huanghua, Jizhong and Linqing. The Bozhong sub-basin covers most of the the offshore area. It has been a depositional centre since the Oligocene with, unlike most of the other sub-basins, late-stage faults developed in the younger sediments. In the onshore regions the largest fields are in the Dagang, Liaohe, Huabei and Jidong Provinces.

Tarim Basin

The Tarim Basin is in northwest China in the Xinjiang region. Its northern boundary is the Tien Shan mountain range and its southern boundary is the Kunlun Mountains on the edge of the Tibetan Plateau. The Taklamakan Desert covers much of the area.

The basin was formed during the Carboniferous and Permian as the Tarim micro-continental fragment fused with other parts of the Eurasian continent. Compression around the margins is occurring as the micro-continent is forced under the northern and southern mountain ranges. A thick succession of Carboniferous to Quaternary sediments occupy the centre of the basin, in parts exceeding a thickness of 15 kms.

Source rocks are primarily Permian mudstones. Rivers originating in the north have flowed into the Tarim Basin accumulating potential reservoirs in salt lakes and marshes. Owing to the depth of burial Tarim is primarily prospective for gas with pipelines feeding the populated regions of Beijing, Shanghai and Guangdong.

Junggar Basin

The Junggar Basin lies in the Uygur Autonomous Region of Xinjiang in the northwest between the Mongolian Altai Mountains in the north and the Borohoro and Eren Habirga mountains in the south. On its western edge, the Dzungarian Alatau and Tarbagatay ranges separate it from the Lake Balqash depression in Kazakhstan.

The basin was formed in a similar fashion to Tarim. Source rocks are Permian lacustrine sediments which provide oil alluvial fan reservoirs of Permian, Triassic and Jurassic age at the basin margin. The Karamay Thrust Belt, which forms the northwestern margin, is the site of main oil fields. Smaller fields lie in Himalayan structures in the southwest. Carboniferous basement rocks on the southward extension of the Karamay Thrust Belt have also proved productive.

Ordos Basin

The Ordos basin in central north China is also surrounded by mountains including Yin and Daqing in the north, Qinling in the south, Helan and Liupan in the west, and Luliang and Taihang in the east.The Great Wall divides the basin into two parts, a northern arid desert and a southern semi-arid plateau. The Yellow River lies on its western border from which tributaries flow into desert lakes or salt marshes.

The basin is a depression of the North China Craton with sediments present from Pre-Cambrian age up to the present reaching up to 10kms in thickness. Oil, mainly in the south, and gas, mainly in the north, are produced from Triassic, Jurassic, and Ordovician sediments. Fields include Yanchang, Sulige, Ansai, Jing'an, and Jingbian.

Sichuan Basin

The Sichuan Basin is a lowland region in southwestern China bordered by the Qionglai Range in the west, the Longmen Mountains in the northwest and the Daba Mountains in the northeast. It underlies the central and eastern portions of Sichuan province and neighbouring Chongqing Municipality. Flat, fertile and heavily populated, it is a significant gas producing region.

The majority of the gas in the basin is non-associated and produced from carbonate reservoirs of Sinian, Paleozoic, and early Mesozoic age and also from low-permeability Upper Triassic fluvial sandstone reservoirs and Permian and Triassic coalbeds. Modest quantities of oil and associated gas are also produced from lacustrine rocks of Jurassic age. The main gas and oil provinces are Chongqing, Chuanzhong, Chuanxibei and Chuandongbei. Large sour gas discoveries (called Yuanba and Puguang) are also very significant.


China's offshore shelf is wide, extending over 320 kms for much of its 3,800 km length, although a substantial part is disputed with neighbouring countries. The area covers, from north to south, the Bohai Gulf, the Yellow Sea, the East China Sea, the South China Sea and the Beibu Gulf (Gulf of Tonkin in Vietnam). All the basins are Tertiary rifts overlain by deltaic sediments emanating from rivers draining the Chinese continent.

The shallow waters of the Bohai Gulf east of Tianjin overlie the offshore extension of the Bohai Bay Basin (North China Basin), 200 kms east of Beijing. This produces over half of China’s offshore oil. South from here beyond the Yellow Sea, the East China Sea overlies a large basin west of Shanghai. The Xihu trough is the most prospective area, holding many discoveries mainly of gas and condensate.

Further south the shallow waters of the Pearl River Mouth Basin in the South China Sea is an important producing area despite problems with typhoons, which sweep through the area in late summer. The adjacent Yinggehai basin to the southwest, south of Hainan Island, is a gas-prone area with large non-associated gas fields. These two areas deliver the bulk of China’s offshore gas with the Yacheng 13-1 field supplying gas to fuel Hong Kong’s electricity generators. In 2014 gas production began from the Liwan gas project, the first deep water development in China.

Lastly the Beibu Gulf lies in the South China Sea between Hainan Island and the mainland. It is underlain by the Beibuwan basin. Many oil accumulations have been developed here but all are complex and of a small size.

Other areas

Several smaller basins produce some oil and gas from similar stratigraphies in the centre and south of the country including the Subei Basin in Jiangsu and Anhui Provinces and the Nanyang Basin in Henan Province in the east, and the Qaidam Basin in Qinghai Province and Jiuquan Basin in Gansu Province in the west.

There are also many potential tight oil and gas reservoirs within the conventional oil and gas basins. The most promising shale gas resources are in the Sichuan and Tarim basins. In the northeast tight gas has been developed in the Ordos (Changqing) Basin’s, Sulige and Changebei fields. There is also potential for tight oil primarily in the Songliao, Bohai Bay and Ordos basins.

CHINA: SEDIMENTARY BASINS (source: Carnegie Endowment for International Peace)


China lies between the Siberian Shield and the Pacific Oceanic Plate. It can be broadly divided into two geological provinces within which are a number of productive sedimentary basins in the north, northwest and northeast and scattered through the south provinces and offshore.

Globalshift considers the Songliao Basin and and Bohai Basin (on and offshore) to be of most significance with the Tarim, Junggar, Ordos and Sichuan basins also important. Offshore the Pearl River Mouth Basin in the South China Sea has an extensive productive area.

In the west lie the compressional basins which have deep Palaeozoic sequences. In the centre and east a series of Mesozoic and Cenozoic basins overlie the North and South China Cratons (Amur Plate and Yangtze Plate). These are bounded by major shear zones to the north and south. They run into the continental shelf that includes a series of back-arc basins at the edge of the Philippines and Pacific Plates.

Principal source rocks occur in Cretaceous and early Tertiary lake bed deposits with reservoirs throughout the overlying sequences.

Vertical axis in chart corresponds to number of wells spudded in year including stand-alone sidetracks.

Wells in chart include those drilled in exploratory and development categories for oil and gas, but excluding CBM.

Full breakdowns are available in datafiles.

Oil and gas forecasts

Through increased investment, application of improved technologies and fuel substitution, China has increased its oil production by 30% over the last 20 years. However, despite extensive EOR in its geologically complex reservoirs and intense drilling onshore in the old giant fields, such as Daqing, plus widespread exploration programs offshore (including in deep waters), the country’s output is now flat and probably will remain so for the next 15 years.

The Daqing field, for example, has seen a huge expansion in investment. In 2002, PetroChina drilled 1,975 development wells; in 2014 it drilled 4,498. However, production declined by over a quarter and decline is expected to continue at around 3% each year. The heavy oil Liaohe oil fields have seen output stabilise due to steam and polymer flooding programs whilst the Jilin fields have been subjected to hydraulic fracturing and CO2 injection in order to slow decline.

Per well volumes from older fields are dropping and there is little chance of fully offsetting this natural decline over the long term, especially as periods of lower oil prices will lead to reduced spending. Although there will be intermittent up and down movements in production volumes it is inevitable that China’s oil production will begin to persistently decline after 2030. Even with new LTO production, which we forecast will begin soon, declines are expected to average 2.5% each year.

The potential for output growth in China is not helped by the rigid structure of its industry. Compare this to the many risk-taking companies in the USA which exploit opportunities wherever possible but then suffer the consequences of lower oil prices. Nevertheless investment in infrastructure in the remote northwest has enabled considerable growth in output from the Tarim and Junggar Basins in Xinjiang Province. Conversely offshore, independent oil companies have provided capital and expertise. Exploration of the shallow waters of the relatively well-explored Bohai Bay led by CNOOC has seen the most growth.

Meanwhile gas production has increased by nearly 600% over the last 20 years as demand has surged and the country has tried to reduce the share of coal it uses. An extensive new pipeline infrastructure has been built to deliver gas from central and west China to the populous east. And in the northeast, with technical assistance from Total and Shell, CNPC is developing tight gas in the Ordos Basin’s Sulige and Changbei fields. China has also begun to develop shale gas in the Sichuan and Tarim Basins as well as coal bed methane.

Although progress has been slow (due to a combination of lack of technical expertise and a shortage of water), Globalshift forecasts that up 50% of China’s gas will be from tight reservoirs or coal beds by 2030 and that the country will be producing more than double the amount of gas it could manage in 2010 although by 2040 the beginning of decline is expected.

To meet burgeoning demand for oil and gas, Chinese companies have sought to secure stakes in, amongst other places, the Middle East and East Africa. Chinese companies are also involved in the construction of long distance gas pipelines to Central Asia and Siberia. The country is well aware of the long term limitations of its indigenous energy, especially as climate change and pollution issues are forcing a pull-back from coal. It is growing its renewables supplies faster than anywhere else in the world.