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Some 20 kilometers out from the port of Tianjin, in the jade waters of the Bohai Sea, a vast metal structure rises above the surface. This hulking offshore platform, 11-1 CEPJ, is the beating heart of the Caofeidian oil and gas field — and a monument to China’s multibillion-dollar efforts to insulate itself from the whims of its rivals.China has long sought to reduce the risk that comes with being both the world’s top consumer and its largest importer of energy. But the urgency and scale of that ambition have increased dramatically in recent years and months, along with geopolitical tension and the ascent of a mercurial Donald Trump to helm a US administration unafraid to use trade as a weapon. Last month, Washington also blacklisted Russia’s top two oil producers, prompting Chinese refiners to cancel some cargoes.Since 2019, when the latest output expansion drive began in earnest, China’s majors have spent $468 billion on drilling and exploration — that’s up by almost a quarter from the previous six years, and enough to make PetroChina Co. the world’s biggest spender during that period, outpacing even heavyweights like Saudi Aramco. Production is already rebounding, and with Beijing likely to double down on self-reliance, there is no indication that pace of investment will slow in the coming years. “In the last few years, we have seen an energy crunch all around the world,” Huang Yingchao, vice president of natural gas at PetroChina International (Singapore) Pte, the energy giant’s trading arm, said at a conference last week. “Gas and LNG are like tap water and bottled water. Tap water is cheaper and is more reliable, and the logistics are easier. So we push for domestic production.”All of this is becoming a huge, unspoken headache for the world’s largest oil and gas producers. From Exxon Mobil Corp. to BP Plc, sprawling corporations have grown used to having China as the engine for the world’s fossil-fuel demand. Indeed, for much of the last decade, it accounted for more than 60% of global oil demand growth.Live EventsTake Shell Plc, one of the world's largest liquefied natural gas suppliers. It is investing billions into new LNG supply on the expectation that global demand will expand 60% by 2040, driven largely by China. Its boss, Wael Sawan, told a conference in June that gas could make up 20% of China's energy mix, compared with single digits today. "We believe China is a huge market,” Hassan Alyami, vice president of Aramco’s Ras Tanura refinery said at an industry gathering last month. “Demand is increasing. Maybe now it is stable, but in 2027 and beyond, demand is going to increase.”But the past may no longer be a good way of predicting the future. Domestic output is increasing just as demand growth slows, with the economy sputtering and cleaner cars beginning to rule the roads. This year has already seen competition from other fuels, and Sanford C. Bernstein analysts expect domestic gas production to begin outpacing demand growth by the end of this decade, a moment when China may also be taking more pipeline gas from Russia, further cooling appetite for imported LNG.Nevertheless, from January to October global companies have greenlit nearly 100 billion cubic meters of new LNG export capacity, already the second-most for any year on record. In the US alone, $100 billion could be invested in new LNG export infrastructure this decade, according to Wood Mackenzie Ltd.Trump has said China will buy more US energy and even potentially invest in Alaska as part of a wider trade truce. But, as with other key areas, like agriculture, it will not be for lack of alternative options.“China is coming in with increased production. With oil demand falling or plateauing, that serves to neutralize — or to provide China with a buffer against — the Trump administration’s push for energy dominance,” said Erica Downs, senior research scholar at Columbia University’s Center on Global Energy Policy. “They’re in a completely different world and an even better position than during Trump 1.0.”China still consumes far more than it produces, and that is unlikely to change any time soon. But today it ranks No. 7 in crude production, ahead of many members of the Organization of the Petroleum Exporting Countries, and in natural gas it is No. 4.That clout speaks to the evolution of China’s oil majors, all of which have expanded dramatically in size and sophistication this millennium. PetroChina, Cnooc Ltd and Sinopec, have become giants in terms of output, refining and oil trading, alongside rivals Chevron Corp and Shell Plc. PetroChina’s annual production has risen by nearly a quarter in the past decade to 1.8 billion barrels of oil equivalent.“The Chinese oil majors have surprised not just the market, but they’ve surprised themselves by exceeding production targets,” said Michal Meidan, director of China research at the Oxford Institute for Energy Studies. “It gives China a sense of control, especially as oil demand is declining.”Under the first Trump administration and during the first trade war, President Xi Jinping called for a renewed effort to boost domestic output. Since, oil production has risen 13% and gas has climbed by more than half. Both are on track to set all-time records this year — the equivalent of adding nearly an Indonesia worth of oil and an Algeria worth of gas to the balance of global supplies.Government officials haven’t made specific future targets public — at best, an indication could come early next year, when the 15th Five-Year Plan is approved by China’s annual parliament. But they’ve made it clear they want the drilling boom to continue. That new economic blueprint is expected to make upstream expansion a priority, according to a person familiar with the government’s thinking. The person asked not to be named as the goals have not been published.“The Rice Bowl of Energy”Beijing’s focus on hydrocarbon security arguably dates back to the late 1950s, to a period around China’s split with the Soviet Union — and with its engineers — that ingrained in officials the need to avoid leaning too heavily on others. The country’s very first oilfield, Daqing, was already a model of self-reliance, expanding rapidly as technology, engineers and construction equipment were funneled toward it.Those concerns resurfaced in earnest a decade ago, when OPEC launched a price war to halt the growth of US shale oil and combat a plunge in value. China was caught in the crossfire, saddled with costly, aging fields that the head of PetroChina in 2016 said had “no hope” of making a profit, even as prices recovered. Output tumbled 12% over the following three years.Under Xi, Beijing has set out to change that. In the midst of a trade war with the US, he underlined in 2018 the need to boost domestic oil and gas exploration and production — at any cost. He reinforced the message during a 2021 visit to the Lai 113 block at the Shengli oil field in the eastern province of Shandong.“Oil development is of great significance to our country,” Xi told a crowd of workers clad in bright red, flame-retardant jumpsuits. “As a major manufacturing nation, China must develop its real economy. The rice bowl of energy must be firmly held in our own hands.”Four years later, on a cool and wet September afternoon in Shengli, Zhang Chuanbao, a senior geologist for operator Sinopec, shows visitors everything the company has done to revive production at a field that was first discovered in 1961. He stops alongside two giant metal tanks filled with liquefied carbon dioxide captured from a nearby refinery. Pumps housed in sheds next to them are injecting that CO2 deep underground into the reservoirs. Sinopec is keen to underline the environmental benefits of storing 1 million tons of CO2 a year underground, but it’s also helping to squeeze out extra oil and gas, boosting the recovery rate by 15%.The carbon capture project is expected to lift oil output by 3 million tons total over the next 15 years, and Sinopec is seeking other ways to maintain the 24 million tons of annual production at the aging field, including tapping shale rock beneath it. All of these advances are possible thanks to vast sums spent in recent years. After Xi called for a renewed emphasis on domestic drilling, the following year China’s three oil majors adopted an action plan for oil and gas development through 2025. PetroChina, the top spender, boosted its capital expenditure by 16% in 2019 to $42 billion, while Cnooc and Sinopec both increased spending by more than a fifth that same year. By comparison, that year Exxon, Chevron, Shell and BP taken together increased spending by just over 5%. Success was not a foregone conclusion. Six or seven years ago, China’s giants were announcing plans to boost production at a time of abundant global supplies. Analysts questioned whether they were prioritizing shareholder returns or national service.But the move proved prescient. Companies began to actually produce more barrels just as oil and gas prices surged, especially from 2022 after the Russian invasion of Ukraine. Cnooc hit record profits that year; PetroChina did the same in 2024.“The companies got kind of lucky,” said Lin Chen, vice president of oil and gas research at Rystad Energy. “The oil price rose higher than their break-even costs, so the more they produced, the more money they earned.”Today, China is going beyond supporting aging fields to sustain fuel output. It’s putting funds into shale, and firms including Ningxia Baofeng Energy Group Co. have built massive refineries that convert coal into oil products, chemicals and natural gas — a process that is even more polluting than the traditional petroleum industry.The biggest success has been at sea. Cnooc has lifted its domestic output — all of it offshore — by 60% between the end of 2018 and 2024. And the emblem of this victory is the Bohai Sea in northeast China, which has supplanted onshore fields to become the largest oil-producing region in the country. Protected by peninsulas jutting out from Shandong on the west and Liaoning to the north, it is home to 60 fields and more than 200 platforms pumping up oil and gas from under the sea floor.One of those is the Caofeidian 11-1 CEPJ. Named after a nearby coastal town, the Caofeidian field is part of a network in Bohai that together produces more than 650,000 barrels of oil equivalent a day — about a tenth of the nation's output. The processing facility is a giant Meccano set of green walkways, yellow rails and scaffolding, red and white cranes and a gray maze of heavily insulated pipes and valves. It wouldn’t look out of place in the Gulf of Mexico or the North Sea, and that’s no accident. China’s drillers have partnered for years with more established Western oil majors. They’ve adapted techniques, and in some cases improved on them, Lin said. Cnooc has reduced the time from discovery to first production from three years to two years, shorter than many international outfits, she said.Cnooc has accounted for more than two-thirds of the nation's increased output over the past five years, and expects continued growth through at least 2027. It has more fields in Bohai and the South China Sea it plans to tap, and has continued to try to push technological boundaries, as with the first successful drilling of a nearly 10,000-meter-deep offshore well.“When you look back to 2018, I communicated with some workers at that time, and they didn’t think it was possible,” Rystad’s Lin said of the order to boost domestic consumption. “But over time, they said, ‘Oh, everything is possible in China.’”In the coming years, oil and gas production are likely to diverge. Oil output will likely plateau near current levels, though gas has room for significant growth, according to Meidan, at OIES. Steady domestic production is still a boon if national appetite for hydrocarbons begins to ease as forecast — and Beijing is pressing ahead.“China is putting a greater emphasis on self-reliance — in technology, in energy, in everything,” said Columbia University’s Downs. “Energy security is still job number one.”Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onchina oil and gas investmentpetrochinacnoocsinopecbohai sea oil fieldchina crude productionchina lng demandenergy security chinadonald trump trade tensions (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) 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