China Oil And Gas Upstream Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

China Oil And Gas Upstream Market Analysis

The China Oil And Gas Upstream Market size is estimated at USD 54.40 billion in 2025, and is expected to reach USD 59.74 billion by 2030, at a CAGR of 1.89% during the forecast period (2025-2030).

China's oil and gas upstream sector demonstrated remarkable resilience and growth in 2023, achieving record production levels of over 390 million metric tons of oil equivalent. The industry's landscape is predominantly shaped by state-owned enterprises, with increasing participation from private and foreign firms fostering a competitive environment focused on maximizing production optimization. The sector has witnessed significant technological advancements, particularly in deep-water exploration and unconventional resource development, with natural gas production reaching 234.3 billion cubic meters in 2023, marking a 5.6% increase from the previous year. This growth trajectory has been supported by substantial investments in oil and gas exploration and production capabilities, particularly in offshore and deep-water projects.

The upstream sector has experienced a notable shift toward unconventional resources, with unconventional natural gas production exceeding 96 billion cubic meters in 2023, constituting 43% of the total natural gas output. This transformation is exemplified by breakthrough developments in shale oil production, which surpassed 4 million metric tons in 2023, while onshore deep oil fields yielded 11.8 million metric tons. The industry has demonstrated particular success in ultra-deep exploration, with China emerging as a global leader in onshore ultra-deep oil and gas drilling, specifically in wells exceeding 6,000 meters in depth. These achievements reflect the sector's growing technological sophistication and operational capabilities.

Significant discoveries have reinforced China's position in the global upstream sector, highlighted by the February 2024 discovery of the world's largest oilfield in metamorphic reservoir rocks in the Bohai Sea. The Bozhong 26-6 field, with hydrocarbon reserves exceeding 1.3 billion barrels, represents a milestone in metamorphic rock oil field exploration. Additionally, the March 2024 discovery of the Kaiping South Oilfield, with proven reserves of 102 million tons of oil equivalent, demonstrates the continued potential for major finds in the South China Sea region. These discoveries have been complemented by innovative approaches to field development, including the July 2024 launch of China's first green-designed oilfield in the Beibu Gulf.

The industry is witnessing strategic consolidation and collaboration through innovative partnerships and organizational structures. In July 2024, the Chinese government established a new consortium comprising national oil producers and other state-owned enterprises, specifically targeting ultra-deep oil and gas reserves. This initiative brings together diverse expertise from aerospace, steel, equipment manufacturing, and power generation sectors, demonstrating a coordinated approach to addressing technical challenges in ultra-deep drilling. The collaboration extends to international partnerships, with major global players contributing technology and expertise through joint ventures and production-sharing agreements, particularly in challenging deep-water and unconventional resource developments. The focus on enhanced oil recovery and well completion techniques further underscores the industry's commitment to advancing its capabilities in both offshore oil and gas and onshore oil and gas projects.

China Oil And Gas Upstream Market Trends

Growing Demand for Natural Gas and Developing Gas Infrastructure

China's transition from coal to natural gas as a primary energy source has led to substantial growth in both domestic production and consumption, driven by the government's carbon emission targets and environmental policies. According to the Statistical Review of World Energy 2024, China's natural gas production reached 234.3 billion cubic meters (bcm) in 2023, marking a 5.6% increase from 2022, while consumption surged to 404.8 bcm, representing a 7.2% rise. This growing demand has catalyzed significant infrastructure development, exemplified by China's expanding LNG import capabilities. In the first four months of 2024, China's LNG imports witnessed a remarkable 23.47% increase compared to the same period in 2023, reaching 26.07 million tons, driven by attractive spot LNG prices and new terminal operations.

The rapid expansion of gas infrastructure is evident in the development of new LNG terminals and processing facilities across the country. In May 2024, the state-owned China Oil and Gas Pipeline Network Corporation (PipeChina) commenced operations at its Zhangzhou LNG import terminal in Fujian, with a capacity of 3 million metric tons of LNG. This facility alone can serve approximately 13 million households across multiple provinces, including Fujian, Jiangxi, Hunan, Guangdong, and Zhejiang. Further infrastructure developments include CNOOC's Zhuhai Jinwan LNG Terminal, featuring five 270,000-cubic-meter tanks, which upon completion in 2024 will become South China's premier LNG storage and transport hub with an annual processing capacity of 7 million tonnes. Additionally, the privately-owned Huaying Natural Gas and Sinopec's joint venture in Chaozhou, Guangdong province, demonstrates the industry's commitment to expanding gas infrastructure, with an estimated investment of CNY 8 billion (USD 1.1 billion) allocated to its first phase development. The integration of oil and gas equipment and production monitoring systems in these projects enhances efficiency and reliability, while automation in upstream operations and analytics in oil and gas are pivotal in optimizing operations and ensuring sustainable growth. Moreover, well testing and the use of production chemicals play critical roles in maintaining the integrity and performance of these infrastructures.

Segment Analysis: Location of Deployment

Onshore Segment in China Oil and Gas Upstream Market

The onshore oil and gas segment dominates China's oil and gas upstream market, commanding approximately 62% of the total market share in 2024. This significant market position is supported by China's extensive onshore oil and gas operations across major basins, including the Sichuan Basin, Ordos Basin, and Tarim Basin, which collectively account for 70% of the nation's increased output. The segment's strength is further evidenced by its remarkable achievements in unconventional natural gas production, which exceeded 96 billion cubic meters in 2023, constituting 43% of the total production. China has also made significant strides in shale oil production, reaching over 4 million metric tons, while its onshore deep oil fields yielded 11.8 million metric tons, positioning China as the global leader in onshore ultra-deep oil and gas fields exceeding 6,000 meters in depth. The use of hydraulic fracturing and well stimulation techniques has been pivotal in enhancing production efficiency.

Offshore Segment in China Oil and Gas Upstream Market

The offshore oil and gas segment is projected to be the fastest-growing segment in China's oil and gas upstream market, with an expected CAGR of approximately 5% during the forecast period 2024-2029. This growth trajectory is driven by significant discoveries and developments in key offshore oil and gas regions, particularly in the South China Sea and Bohai Sea. The segment's expansion is supported by breakthrough technologies in ultra-deep water exploration and production capabilities, exemplified by recent discoveries like the Kaiping South oilfield with proven oil and gas reserves totaling 102 million tonnes of oil equivalent. The implementation of advanced drilling rig technologies, successful deployment of deep-water production facilities, and the continuous development of new offshore fields are expected to sustain this growth momentum throughout the forecast period. Additionally, the adoption of directional drilling and well intervention techniques has significantly enhanced the efficiency of offshore operations.