China 2008 Crude Oil Output Rises 2.3%, Gas Gains 12%

By Winnie Zhu

Jan. 22 (Bloomberg) -- China, the world's second-biggest energy user, boosted crude oil production by 2.3 percent in 2008 while natural-gas output gained 12 percent even as the economy expanded at the slowest pace in seven years.

Oil output rose to 189.7 million metric tons the China Mainland Marketing Research Co., which compiles data for the National Bureau of Statistics in Beijing, said in a faxed statement today. That compares with the 1.6 percent gain in 2007. Gas production reached 76 billion cubic meters last year.

Chinese oil companies stepped up output to ensure sufficient fuel supplies during the Beijing Olympics in August and after a 7.9-magnitude quake in May and the worst snowstorms in five decades in January. Gross domestic product grew 6.8 percent in the fourth quarter from a year earlier as a global recession curbed demand for China's goods and services.

``Crude production may continue to grow slightly, while gas output will have a relatively big increase this year given more discoveries,'' Bai Xuesong, a senior engineer at China International Chemical Consulting Corp., said by telephone from Beijing today.

The economic slowdown may not diminish or interrupt production as new fields are being found, Bai said. Cnooc Ltd., China's biggest offshore oil producer, aims to increase crude oil and natural gas output by as much as 18 percent this year as part of the company's long-term development.

China National Petroleum Corp., the country's largest oil company, boosted crude oil output to a record in 2008 as the nation stepped up production partly to build fuel reserves, the company said on Dec. 31 without elaborating.

Oil Imports Fall

The economic slowdown did sap demand for energy imports last year. China increased crude oil imports at the slowest pace in three years with shipments rising 9.6 percent to 178.9 million tons in 2008, customs data showed on Jan. 13.

Crude oil processing fell 7.4 percent to 27.16 million tons in December, the biggest drop since at least 2003, according to China Mainland's statement. That's also the lowest since September 2007. Oil refining in 2008 rose 3.7 percent to 342 million tons, compared with a 6.4 percent expansion in 2007. Almost half of the crude China uses to produce fuels is imported.

Output of diesel, used to power farm equipment and vehicles, dropped 9.5 percent to 10.15 million tons last month and increased 8 percent to 133.2 million tons in the year. Kerosene production fell 1.9 percent to 900,900 tons in December and rose 0.5 percent to 11.65 million tons in 2008.

China, the world's largest coal producer and consumer, increased output of the fuel by 13 percent to 2.62 billion tons in 2008. Production in December dropped 1.3 percent to 219.9 million tons.

Power output, 80 percent of which is fueled by coal, fell for a third month in December, dropping to 273.9 billion kilowatt-hours, according to China Mainland. Electricity production gained 5.5 percent to 3.4 billion megawatt-hours in 2008.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.