Daqing.jpg (Photo : Reuters)
Chinese oil and gas producer PetroChina is set to reduce production in the country's largest oilfield starting next year.
Daqing Oilfield, which turns out nearly a quarter of China's domestic oil output per year, will see its output reduced by 1.5 million tons by 2015 and 1.3 million tons for the succeeding years, Xinhua News Agency reported Sunday, citing an economic work conference in northeastern China's Heilongjiang Province.
Considered to be PetroChina's "crown jewel," Daqing has produced over 2.1 billion tons of crude oil since it started operations in 1960. In 2013, it generated more than 40 million tons, marking its 11th consecutive year in which it exceeded 40 million tons in output.
But limited oil reserves, high development costs and falling international oil prices have caused Daqing to reduce production, the report added.
Energy experts predict that the reduced output will allow PetroChina and its parent company, China National Petroleum Corporation (CNPC), to better position itself against the current state of the global crude market.
"Maintaining a high production level had been the predominant task when crude oil prices were high, but such task is less pressing for oil field operators now as the global crude price has been at its lowest in decades," Yu Qing, a senior energy analyst with Shanghai-based CBI Research Center, said in an interview.
However, there are concerns that the output reduction will hamper Heilongjiang's economic growth, as Daqing accounts for 90 percent of its energy sector. Citing preliminary estimates, Xinhua reports that the province is set to lose more than 6 billion yuan ($960 million) of revenue in 2015 alone.
To offset the cut in production, Heilongjiang plans to speed up its refinery and petrochemical projects in Daqing and deepen ties with the CNPC.
"Spreading across the industrial value chain will give Daqing more ability to withstand a sudden price drop for any single end product in the long run," Yu said.
