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Shanghai - The world’s biggest consumer of energy is producing less of it.
China’s crude output dropped 4.6% to 101.59 million metric tons in the first six months of the year, the lowest for that period since 2012, according to data from the National Bureau of Statistics on Friday.
Coal production fell 9.7% to 1.63 billion tonnes in the first half of the year. For June, crude tumbled 8.9%, coal fell 16.6% and natural gas slipped 0.5%. Ethylene output also decreased to the lowest in a year to 1.39 million tonnes.
The cutbacks highlight cost and environmental pressures on the world’s second-largest economy as it shifts toward consumer-driven growth and away from industrial production. Oil producers including PetroChina and Cnooc shut unprofitable fields amid a price crash and took advantage of cheaper overseas supplies.
Meanwhile, coal output has slipped as President Xi Jinping’s government compels miners to reduce an overcapacity in the biggest producer and consumer of the fuel.
"The nation’s reduction in domestic oil and coal output last month have been larger than expected," Tian Miao, an analyst with policy researcher North Square Blue Oak, said by phone.
"Ample, cheap overseas resources have made the government more comfortable with deep cuts to high-cost local supplies."
Rising imports
China boosted coal imports last month to the highest in more than a year, pushing inbound shipments 8.2% higher during the first half. Purchases of oil from overseas have surged more than 14% over the same period, though they slowed to the weakest pace in five months during June.
Crude processing gained 2.8% during the first half to a record.
China’s goals to cut coal and steel overcapacity will be reached this year, National Development and Reform Commission spokesperson Zhao Chenxin said on Thursday in Beijing.
Coal output will fall by 280 million metric tonnes this year, Xu Shaoshi, chairperson of the country’s top planner, said last month.
PetroChina, the nation’s biggest producer, said in March it expects annual oil and gas output to fall for the first time in 17 years as it shuts fields that have "no hope" of turning a profit, while Cnooc sees output slipping as much as 5.2% this year.
Behind expectations
Oil’s rate of decline is lagging behind expectations of a 6.9% slide forecast by the National Energy Administration in February. Coal’s slump is ahead of the outlook for 8.2% drop.
The drop in coal and crude production contrasts with a 4.1% rise in natural gas output in the first half of the year to 69 billion cubic meters. Gas production is forecast to rise 13% this year, according to the NEA’s outlook.
The government has encouraged the use of gas as a cleaner-burning replacement for coal and China National Petroleum, the country’s oil and gas giant, intends to shift priorities in the second half of the year toward exploration and production of the fuel.
