Oil and gas have reinforced supply security throughout this year as China navigates the path between energy transition and its carbon neutrality goals, said industry experts and company executives.

As the world's second-largest economy intensifies efforts to align energy security with its carbon-neutral ambitions, oil and gas are playing central roles as advancements in exploration and production technology have boosted output, ensuring stronger energy resilience, they say.

"China's oil and gas industry in 2024 has demonstrated remarkable resilience and adaptability, leveraging advanced technologies to increase domestic production while reducing reliance on imports," said Wu Mouyuan, vice-president of the Economics and Technology Research Institute under China National Petroleum Corp.

Breakthroughs in ultra-deep drilling and offshore exploration have significantly enhanced the country's capacity to tap into its abundant but challenging reserves, securing a more robust foundation for energy independence, he said during the International Energy Executive Forum 2024 held in Beijing earlier this month.

Oil and gas are expected to maintain their share of the energy mix over the medium to long term, making it critical to avoid disruptions caused by the energy transition. Stable investments and forecasts are essential to maintaining high supply levels and ensuring global energy security, he said.

According to the institute, China's energy self-sufficiency rate has climbed to an impressive 85 percent in 2024, a five-percentage-point increase compared to a decade ago. The figure is expected to further climb to 95 percent by 2060, driven by accelerated innovation in exploration and the scaling up of renewable energy systems.

The energy output this year surpassed 5 billion metric tons of standard coal equivalent, and projections for 2060 suggest it will reach 6 billion tons. This growth reflects China's strategic dual focus: securing a stable fossil fuel supply and scaling renewable energy as a major contributor to its energy mix, it said.

Wu said China's oil and gas sectors remain indispensable to its energy strategy, even as the nation advances toward its goal of carbon neutrality before 2060.

Technological breakthroughs, such as those related to ultra-deep oil and gas reserve exploration — as well as deep sea oil and gas exploitation — play a key role in China's energy supply, he said.

A Chinese ultra-deep oil well broke through the 10,000-meter depth mark in March 2024, with the country's first well exceeding a vertical depth of more than 10,000 meters, setting the record for not only the deepest well in Asia, but also the world record for the shortest time taken to drill a 10,000-meter deep well.

In the oil drilling industry, wells that are between 4,500 and 6,000 meters deep are called deep wells. Wells between 6,000 and 9,000 meters deep are called super-deep wells, and those deeper than 9,000 meters are classified as ultra-deep wells.

With a designed depth of 11,100 meters, the Shendi Take 1 ultra-deep well, located in the Tarim Basin in Northwest China's Xinjiang Uygur autonomous region, is part of China's efforts to expand domestic oil production, said its operator CNPC.

It shows that China has independently overcome the bottleneck in extra-deep well drilling technology, and that its deep-earth oil and gas drilling capability and supporting technology have reached internationally advanced levels, it said.

At present, China's onshore deep and ultra-deep oil and gas resources account for 34 percent of the country's total oil and gas resources, and the proportion of new deep and ultra-deep oil and gas reserves is increasing year by year.

China is the world's largest crude oil importer and relies on imports for nearly three-quarters of its needs. It has been investing billions of dollars to maintain its domestic crude oil production at above 4 million barrels a day.

Offshore oil and gas resources, in particular, are also gaining prominence. China National Offshore Oil Corporation reported record growth in both crude oil and natural gas output this year, supported by advanced engineering technologies.

The nation's offshore oil discovery rate has reached 30 percent, exceeding the global average of 24 percent, while offshore natural gas discovery remains an area of significant untapped potential, said Wang Zhen, head of the CNOOC Energy Economics Institute, during the forum.

"As global offshore crude oil contributes over 70 percent of new discoveries, China's offshore resources are set to play an increasingly vital role in energy security," he said.

Industry experts believe investment in offshore oil and gas exploration is expected to increase further, with more than half of this year's domestic oil increment likely to come from offshore sources.

China's offshore oil and gas production is expected to rise further this year, while the country's ongoing investment and focus on upstream production will be crucial for ensuring its energy security, said Li Ziyue, an analyst with BloombergNEF.

Natural gas, often hailed as a transition fuel in the journey to a low-carbon future, has also seen steady production increases in China this year.

The CNPC institute expects annual natural gas output to rise from 250 billion cubic meters currently to over 310 billion cubic meters by 2035, with further growth projected through 2060.

The combination of domestic natural gas development and the adoption of new technologies like coal gasification ensures that gas will remain a cornerstone of China's energy system, said Wu.

Wu said China has been tapping into unconventional resources to expand its energy supply, with significant advancements in shale gas exploration and coalbed methane extraction currently reshaping the country's resource landscape.

The untapped reserves, such as low-maturity shale oil and underground coal gasification, could unleash vast new potential in the coming decades, he said.

"Unconventional resources will see exponential growth with continued technological breakthroughs," said Li Guoxin, deputy chief geologist of CNPC. "These resources will not only enhance self-sufficiency, but also provide a buffer against external market uncertainties."

While oil and gas remain critical, China's energy demand is undergoing a transformative shift. The country's leadership in renewable energy, particularly wind and solar power, has set the stage for a multifaceted energy structure by 2060, said Wu.

Currently, coal accounts for 55 percent of the energy mix, with oil and natural gas at 18 percent and 9 percent, respectively. By mid-century, renewables are expected to dominate, accounting for nearly 80 percent of the energy portfolio, he said.

"Fossil fuels will transition to serve as a safety net and a source of key materials, while non-fossil fuels will become the backbone of energy supply," Wu said.

Under such a circumstance, the CNPC institute expects the country's oil consumption to peak around 2025 at 770 million tons, five years earlier than previous estimates.

China's oil demand has reached a historic turning point. In 2023, oil consumption for transportation peaked, driven by the rapid adoption of electric vehicles and advances in public transit electrification.

Over the long term, oil's role in China will increasingly pivot toward industrial and chemical applications. By 2060, petrochemical feedstocks are projected to account for 60 percent of oil consumption, up from 50 percent today. Meanwhile, transportation fuel use will decline to less than 20 percent, it said.

"The rise of renewable energy manufacturing, which relies heavily on petrochemical materials, ensures that oil will remain indispensable for decades to come," said Wu.

Despite the fact that China has emerged as a powerhouse in scaling renewable energy systems, with non-fossil energy production expected to surpass 5 billion tons of standard coal equivalent by 2060, making up nearly 80 percent of the energy mix, oil and gas will remain indispensable in the near term, he said.

"With bold ambitions and a clear roadmap, China's energy sector stands at the forefront of a transformative — one that will define the country's economic and environmental legacy for generations to come," said Wu. "The sheer scale of industrial and transportation needs, coupled with the current limitations of renewables, means fossil fuels are still vital for the foreseeable future."

China has stepped up its international cooperation in the oil sector in 2024, expanding partnerships with key energy-producing countries to secure stable supplies and enhance technological collaboration.

China's three State-owned oil giants — China Petroleum and Chemical Corp, CNPC and CNOOC — have ramped up efforts to strengthen international collaboration in oil and gas development throughout the past year, with an increasing focus on transitioning to green energy.

Dai Houliang, chairman of CNPC, said the oil sector should expand oil and gas cooperation to jointly secure global energy supplies while emphasizing the importance of increasing openness and collaboration to accelerate transformation and upgrade efforts.

The emphasis on expanding oil and gas cooperation remains critical in ensuring global energy security amid growing demand and geopolitical uncertainty, said Wang Lining, director of the oil market department under the economics and technology research institute of CNPC.

Deepening collaboration serves as a strategic buffer against the volatility induced by geopolitical uncertainties and market disruptions. This approach reinforces energy diversification, supply chain resilience, and long-term sustainability in the face of shifting geopolitical and economic dynamics, he added.

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