Key points
- China is projected to peak its oil consumption by 2027
- The government has spent over $230 billion supporting its EV industry
- Domestic oil output rose 13pc between 2018 and 2024
ISLAMABAD: China is on track to peak its oil consumption by 2027, thanks to a sweeping national strategy that blends aggressive domestic oil drilling with a state-led push into electric vehicles, according to a report by The Wall Street Journal.
Amid long-standing fears that foreign oil dependence—particularly on US sources—could become a geopolitical liability, Beijing has invested hundreds of billions of dollars in securing energy independence. That includes over $230 billion in subsidies for its electric vehicle (EV) sector, and the installation of more than 14 million EV chargers.
As a result, EVs and hybrids made up nearly half of new car sales in China in 2023, up from just six per cent in 2020. Meanwhile, domestic oil output rose by 13 per cent between 2018 and 2024, thanks to major state-led drilling efforts in remote areas like the Tarim Basin and offshore regions including the Bohai Sea.
President Xi Jinping has framed energy security as a matter of national survival, ordering a revival of domestic oil production after years of reliance on cheaper foreign crude.
Drilling push
China’s drive for oil independence dates back to Mao Zedong, whose campaigns to discover domestic oil created legendary fields like Daqing. But these older fields failed to meet the surging demand after China’s economic reforms.
In 2018, Xi called on state-owned firms to ramp up exploration. Since then, three major national oil companies have poured more than $10 billion into drilling, focusing on offshore reserves and ultradeep deposits in western regions near Kyrgyzstan.
CNOOC, China’s offshore oil giant, has deployed tens of thousands of sensors and partnered with Huawei to digitise its fields. Its Bohai Sea operations accounted for half of China’s oil output growth by 2023.
At the same time, drilling has intensified in the challenging Tarim Basin, where summer temperatures reach 120°F and winter lows plunge to -20°F. By May, PetroChina had drilled 193 wells more than five miles deep there. In February, the firm completed its deepest-ever well at nearly seven miles, making it the second-deepest vertical well globally, behind a Soviet scientific project.
Xi himself praised the Tarim workers in a 2023 video call, calling their efforts “indispensable” to the nation’s future.
Global impact
Although China still imports about 70 per cent of the oil it consumes, demand for gasoline and diesel has plateaued. Oil imports dropped slightly last year, and the International Energy Agency now expects Chinese oil demand to peak within two years.
The global ramifications are already being felt. According to a Bloomberg report published on July 3, China avoided buying US crude for a third straight month—the longest such stretch since 2018—adding pressure on US shale producers already facing falling oil prices and growing global competition.
