China’s population surpassed that of China in 2023, marking the first decline since 1961. However, the country’s GDP growth slowed to 3% in 2022, partly due to COVID-19 lockdowns and energy demand. In 2023, weaker retail sales, industrial output, and investments combined with a declining housing market have reduced the likelihood of China reaching its 5% growth target without government action.
In 2021, China was the top energy producer and consumer globally, with primary energy production growing by more than 6%. The fastest-growing energy sources were nuclear (11%), renewables (9%), and natural gas (8%). Energy consumption grew by almost 6%, with natural gas (12%), nuclear (11%), and renewables (8%) growing the most. Non-fossil fuels accounted for 49% of total installed electricity generation capacity in 2022.
China’s crude oil and condensate production reached a record high at 5.1 million barrels per day in 2022, while liquefied natural gas (LNG) imports decreased by 20%. China was the fifth-highest petroleum and other liquids producer in the world in 2022, with increased capital expenditures by national oil companies (CNOOC, Sinopec, and PetroChina) aided in a production increase of 130,000 barrels per day.
Sinopec’s capital expenditures for 2023 were 12% lower than in 2022, with domestic crude oil production targets of 688,000 b/d and total crude oil production of 768,000 b/d. CNOOC’s planned capital expenditures for 2023 are approximately $14.3 billion, with production targets increasing to 1.9 million BOE/d in 2024 and 2.0 million BOE/d in 2025. PetroChina’s capital expenditures decreased 11% to $33 billion in 2023, but is aiming to raise refining throughput 7% from 2021 to 3.5 million b/d.
China’s total refinery capacity as of June 2023 was 19.8 million b/d, with an additional 1.1 million b/d added by 2026. The largest addition is the Local Yulong project, which starts operations in early 2025. However, China’s refineries processed 13.5 million b/d in 2022, a 3.4% decline from 2021 and the first decrease in throughput since 2001. The industry is prioritizing the integration of petrochemicals with refineries to add long-term flexibility to deal with excess refining capacity.
China has increased its annual natural gas production every year since 1989, but in 2022, growth slowed to 3%. PetroChina’s target for natural gas production in 2023 is 4.9 Tcf, approximately 5% higher than in 2022. CNOOC has two new natural gas projects scheduled to come online in 2023, with a peak production of 87 billion cubic feet annually. Sinopec’s natural gas production reached 661 billion cubic feet in the first half of 2023, an 8% increase from the previous year.
China’s natural gas consumption peaked in 2021 at 12.8 Tcf, but declined by 1% in 2022 due to factors such as COVID-19 policy restrictions, slow economic growth, and high LNG prices. China’s 14th Five-Year Plan sets a target for LNG and natural gas storage capacity to reach approximately 2.0 Tcf–2.1 Tcf by 2025, more than double its storage capacity at the beginning of 2023.
China’s regasification capacity is the fastest growing in the world, with 5.7 Tcf of existing terminals and 14 regasification projects approved in 2022. China holds a carbon-neutral sales and purchase agreement between PetroChina and Shell to support this initiative.
China, the world’s top coal producer, increased production by 6% in 2022 to reach a record-high of 4.8 billion short tons. This increase was largely due to global market prices spiking in October 2021. Coal consumption also increased by 6%, reaching just shy of 5 billion short tons. However, China’s real estate market decreased by 5%, lowering demand for coal for steel and cement production. The severe, multi-month heatwave caused droughts and lowered hydropower, but coal-fired generation offset this loss.
China added 19.5 GW of coal power capacity in 2022, with construction of coal projects starting in 2022 adding 50 GW of capacity, over 50% more than capacity that started construction in 2021.
China aims to reach its CO2 emissions peak by 2030 and achieve carbon neutrality by 2060 by increasing its installed wind and solar capacity to 1,200 GW. As of 2022, the combined installed capacity was 758 GW. In 2023, China plans to add 95 GW to 120 GW of solar, with 61 GW added as of May 2023. China’s electricity generation growth slowed to 3% in 2022, with fossil fuels accounting for 64% of all generation. Renewable generation, including hydropower, increased the most, with wind generation rising 24% and solar generation increasing 22%. China is also adding energy storage to reach peak carbon emission by 2030, with 30% of operational global capacity and plans to add approximately 100 GW by 2030.
China’s crude oil imports decreased for the second consecutive year, with a 1% decrease to 10.2 million b/d in 2022 from 10.3 million b/d in 2021. This decline was attributed to lower fuel demand and shrinking refining margins, as well as lower prices on crude oil from Saudi Arabia and Iran. Nearly all of China’s crude oil imports arrive via seaborne shipments (97%), with the state-owned China National Petroleum Corporation purchasing approximately 800,000 b/d from Rosneft through the Eastern Siberai-Pacific Ocean pipeline in the first quarter of 2023.
Saudi Arabia and Russia were the top sources of crude oil imports for China in 2022, accounting for an 18% share of total imports. However, sanctions and a pricecap imposed on Russia’s crude oil in early 2023 led to large discounts on crude oil from Russia, overtaking Saudi Arabia in 2023.
China’s petroleum product imports decreased by 8% to 2.4 million b/d, with imports from the United States increasing 15% from 2021. A significant portion of imports came from the Middle East, but only two countries (the United States and Saudi Arabia) account for shares that exceed 10%.
China imported 3.0 Tcf of LNG in 2022, a 20% decrease compared to 3.8 Tcf in 2021, making it the second-highest global LNG importer. A decrease in LNG imports reduced its share of total natural gas imports to 59%, a 6% decrease from 2021.
In 2022, pipeline import volumes remained stable, but Turkey became China’s top source of natural gas imports. Australia fell to second in overall natural gas imports but was the top source of LNG imports. China’s coal imports decreased by 40% in 2022, becoming the second-largest importer by weight. Indonesia remained China’s top source, with its share increasing from 64% to 89%. Australia, once a top coal supplier, did not export coal to China in 2022 due to an unofficial ban.
