China’s oil and gas sector is confronting significant obstacles in maintaining and increasing production after setting record highs last year, the National Energy Administration (NEA) reported. In 2025, total oil and gas output reached 420 million tonnes of oil equivalent, with crude oil production hitting a peak of 216 million tonnes, which the NEA said significantly strengthened the country’s energy self-sufficiency.
Despite these gains, the NEA cautioned that the industry faces mounting difficulties as mature fields continue to decline while the costs associated with developing new resources rise. The dual pressures of diminishing output from existing sites and the challenges of exploring deepwater, ultra-deep formations, and unconventional reservoirs mean future growth will be harder to achieve.
The agency attributed the performance to a national push over the past seven years to increase domestic exploration and reverse long-term production declines among state-owned oil companies. This effort was driven by Beijing’s goal of reducing reliance on imports amid global geopolitical uncertainties, including recent disruptions in the Strait of Hormuz that have increased energy market volatility.
Looking ahead, the NEA set relatively modest targets for 2026. It aims to maintain crude oil production above 200 million tonnes and ensure natural gas output continues its steady growth. The agency emphasized that many mature fields are rapidly depleting, necessitating substantial replacement volumes through new discoveries, which are increasingly complex and expensive to access.
Natural gas production has expanded consistently, with last year marking the ninth consecutive year that output rose by more than 10 billion cubic meters. Meanwhile, PetroChina announced that its ethylene production in the first half of 2026 rose 21 percent compared with the previous year, also reaching a new high.
To address ongoing challenges, the NEA said it would intensify exploration efforts in key offshore basins such as the South China Sea and Bohai Bay, aiming to develop large natural gas fields. The regulator also plans to pioneer exploration of emerging resources, including offshore shale oil and gas.
In addition to fossil fuel development, China is pursuing diversification through clean energy sources such as wind, solar, geothermal, and waste heat recovery, according to the report. This strategy aligns with efforts to broaden energy supply options and reduce dependence on imports.
Official data showed a substantial decline in crude oil imports in June, falling more than 40 percent year over year to 29.27 million tonnes. Imports from the Gulf and Russia both contracted, with Russian crude volumes decreasing amid rising prices. In contrast, liquefied natural gas (LNG) imports increased by 8.3 percent during the same period, marking a second consecutive month of growth supported by heightened shipments from Malaysia and Russia.