In a sign of China's growing dependence on foreign oil, the government has projected a double-digit jump in imports with a drop in domestic production for the next several years.
Implications of the five-year energy forecast issued last month by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) are likely to be far-reaching.
Edward Chow, senior fellow for energy security at the Center for Strategic and International Studies in Washington, said that "the Chinese and American relative positions on import dependency have flipped" since the U.S. development of shale oil and the drop in China's high-cost production.
"The Chinese position is actually much worse than the American position ever was," Chow said.
U.S. oil and gas gains recently made headlines with a report by the Energy Information Administration (EIA) that the United States could become a net energy exporter by 2026.
"The U.S. could be completely ... energy independent," said EIA Administrator Adam Sieminski, while presenting the findings of the agency's annual outlook report on Jan. 5.
But China is moving in the opposite direction with its rising reliance on imported oil.
The government's energy plan sets the target for China's oil production in 2020 at 200 million metric tons (4 million barrels per day), down 6.8 percent from 2015 and nearly even with last year.
Net imports would rise 17 percent over the five-year period to 390 million tons (7.8 million barrels per day), while demand would grow by 8 percent to 11.8 million barrels per day (mbpd), the agencies said.
The result is that import dependence would increase to over 66 percent from 64.5 percent last year, meaning that China will buy two barrels of oil abroad for every barrel it produces at home.
Looked at another way, China's increase in oil consumption over the five-year span will have to come entirely from imports.
‘Not realistic at all’
China's reliance on oil imports in 2020 could be even greater than the government's plan suggests.
In its annual World Energy Outlook, the Paris-based International Energy Agency (IEA) projected that China's oil demand in 2020 will reach 12.6 mbpd with domestic production of 3.9 mbpd, implying import dependence of 69 percent.
Wood Mackenzie, an international energy consultancy, has estimated that China's oil output will fall even further by 2020 to 3.5 mbpd, The Wall Street Journal said.
In a separate report, the Journal also cited skepticism among analysts about the government's estimate of a 17-percent increase in foreign oil, noting that net imports climbed 41 percent during the previous five-year period from 2010 to 2015.
"It's not realistic at all," said Yen Ling Song, an analyst at S&P Global Platts, according to the paper. Song said she expects the government's import forecast to be revised up.
Instead of increasing domestic production to meet the challenge, China has been cutting back due to price pressures on its national oil companies (NOCs), which have relied for years on high-cost fields.
China's NOCs have reported steep drops at the country's two oldest and largest production centers last year, while no major new resources have been found.
Output fell 4.8 percent at the Daqing oilfield in northern China's Heilongjiang province, while production slumped 11.8 percent at the Shengli field in eastern Shandong province, based on data reported by the official English-language China Daily.
Total crude production dipped 6.9 percent in 2016 from a year earlier, the National Bureau of Statistics (NBS) said, as imports rose 13.6 percent, according to customs figures.
The NOCs have suffered from China's slower-growing economy and have faced pressure from the government to avoid mass layoffs from steeper production cuts.
But the government's concern over China's capital outflow is only likely to grow if the country keeps paying for more oil from overseas.
At the government's urging, the NOCs have invested heavily in foreign ventures to gain access to "equity" oil and gas under China's "going out" strategy over the past two decades.
The state-owned companies spent U.S. $123.5 billion (850 billion yuan) on overseas mergers and acquisitions between 2005 and 2013 alone, according to a report by Beijing-based SIA Energy.
But China's foreign assets, often purchased at a premium, have also come under pressure from lower energy prices, while the preponderance of oil imports has continued to climb.
‘Pressing need to secure oil’
The risks to China's energy security and economy seem likely to rise if the trends continue.
In a recent paper for the Seattle-based National Bureau of Asian Research, Meghan O'Sullivan, a professor at Harvard University's Kennedy School, suggested that ample world energy supplies have reduced China's worries.
"The shift from perceived global energy scarcity to actual energy abundance has not eliminated China's pressing need to secure oil and natural gas. But it has eased concerns that finite resources would become the source of conflict and ... increased the government's confidence in the market as a means of delivering oil and gas resources," the paper said.
But growing import reliance has raised concerns that China has become increasingly exposed to risks from oil suppliers in volatile regions including the Middle East and Africa.
China's dependence could add to its motivations for projecting military power abroad, although few expect China's buildup to have a significant effect on its energy security anytime soon.
"Obviously, America's power projection capabilities were and are much stronger than China's, even in the future," said Chow in an email message.
"Chinese oil imports are from much more politically unstable and vulnerable countries farther away," he said.
China's own vulnerability makes it all the more remarkable that the government has kept silent about the energy security risks for the country of continually increasing oil imports.
Commentaries on the concern appeared in the official press periodically in the years before 2008, when China's import dependence first reached 50 percent.
But similar expressions of concern have been notably lacking as the dependence ratio approaches 70 percent, raising the question of whether the government is ignoring the issue.
Chow said it seems more likely that the government is concerned but has decided not to call attention to the problem because it does not have a solution.
"So, they are not saying anything publicly, but are worried. So, what should they do?" he said.
Alternative is no solution
One alternative that China has tried—although it is unlikely to be a solution—is to increase its volume and share of oil imports from Russia by overland pipeline to Daqing and the nearby Kozmino port in the Russian Far East.
In 2016, Russian oil deliveries rose 23.7 percent to an average of 1.05 mbpd, taking the lead among China's suppliers from Saudi Arabia for the first time. Saudi exports to China edged up only 0.9 percent to 1.03 mbpd, according to customs data.
China's crude imports from Russia have climbed 165 percent by volume in three years, despite Beijing's longstanding security concerns with relying on energy supplies from its powerful neighbor to the north.
Moscow has eagerly pursued links with China for the past decade as part of its Asia strategy to offset pressures from its main energy markets in Europe.
Russia's crude deliveries to China last year accounted for 22 percent of its oil exports outside the CIS, based on official dispatch data reported by Interfax.