China has become the world's largest renewable energy producer by rapidly deploying solar, wind, and battery storage projects, yet in recent years it has simultaneously raised its oil and gas output. The push to expand its fossil fuel industry is expected to strengthen China's energy self-sufficiency over the coming decade and reduce its reliance on other countries for oil and gas imports. This diversification of energy sources is designed to safeguard China's energy security at a time when many other countries are failing to diversify sufficiently. The stakes extend well beyond China's borders: as the world's largest energy consumer and largest crude oil importer, the country sits at the centre of global energy trade, and the direction of its supply strategy is watched closely by producers and consumers alike.

Official data underscore the scale of the expansion. In 2025, China's crude output reached a record 216 million metric tonnes, according to the National Energy Administration. Natural gas output rose by 10 billion cubic metres last year, while Chinese oil and gas firms added 1.32 billion metric tonnes of oil equivalent in recoverable oil and gas volumes, expanding the country's reserves. Between January and July this year, crude output increased by 0.9 per cent to 4.42 million barrels per day (bpd), according to data from the National Bureau of Statistics.

The growth is driven by government policies aimed at reducing reliance on energy imports. In recent years, China has filled its strategic oil reserves with discounted Russian and Iranian crude while working to increase its own production capacity. That buffer helped isolate the country from the price increases of recent months, which were driven by the ongoing Iran War and the closure of the Strait of Hormuz, one of the world's most important oil chokepoints, through which roughly a fifth of globally traded oil normally passes.

Beijing plans to further strengthen its national petroleum reserves to shield the country from future global disruptions. The government aims to expand strategic overland import corridors to enhance connectivity and to diversify its oil and gas suppliers in order to reduce the threat posed by geopolitical disruptions.

China has already increased oil purchases from West Africa, Latin America, and Russia, helping it mitigate the disruption that much of the world has faced due to constraints on oil exports from the Middle East. According to calculations by S&P Global Energy, the Middle East's share of China's crude imports fell from 55.4 per cent in the first half of 2025 to 44.6 per cent in the same period of 2026.

China has not yet achieved self-sufficiency in oil and gas, however, as its fossil fuel demand continues to rise in line with industrial expansion and population growth. Even so, increasing domestic oil and gas output has enabled China to reduce its fossil fuel imports. In May, China's oil imports fell to their lowest level since 2017, averaging 7.8 million barrels per day.

As part of the government's 15th Five-Year Plan, the national policy blueprint running from 2026 to 2030, China aims to raise domestic oil and gas production to 440 million metric tonnes of oil equivalent by 2030. The long-distance pipeline network is to be expanded by an additional 20,000 km, bringing the total to 220,000 km by the end of the decade.

The government also plans to expand the country's natural gas storage capacity to exceed 13 per cent of national consumption, while the annual capacity of LNG terminals is expected to reach 200 million metric tonnes. To this end, a new round of strategic oil and gas exploration auctions will be launched this year to attract greater investment to the sector and help increase output. The response of energy firms to that auction round, alongside progress on the pipeline and storage build-outs, offers some of the earliest concrete benchmarks for tracking delivery of the plan.

The plan further highlights the need to achieve breakthroughs in key technologies for the safe and efficient development of deep onshore and deepwater offshore resources, and aims to advance the exploration and production of unconventional fossil fuel resources, including continental shale oil, deep shale gas, and deep coalbed methane — resource types that are generally more technically complex and costly to develop than conventional fields.

China will also focus on developing its carbon capture and storage capabilities to support a green transition and its net-zero aims, with CO2 injection volumes expected to reach 10 million metric tonnes per year by 2030. Those aims include pledges to peak carbon emissions before 2030 and achieve carbon neutrality before 2060. In a statement on its website, China's National Development and Reform Commission said the country intends to establish a modern oil and gas supply system by 2030, with a firm focus on the dual priorities of safeguarding energy security and advancing green and low-carbon development.

The government will also invest in advancing clean technology and support domestic manufacturing in the energy industry, an effort to be supported by greater digitalisation.

Lin Boqiang, director of the China Centre for Energy Economics Research at Xiamen University, said: "Geographically, we are short on oil and gas. But China has every confidence in facing its energy challenges, for our reserves and capacity in wind and solar power are strong."

Having massively ramped up its renewable energy and battery storage capacity over the last decade, and having become the world's dominant manufacturer of the solar panels, wind turbines, and batteries powering that build-out, China is now aiming to expand its domestic oil and gas output. Although China has established ambitious climate targets, the government's main focus is on ensuring the country's energy security by diversifying supply and reducing dependence on energy imports. These policies have already helped shield China from recent geopolitical disruptions to oil and gas trade, demonstrating their effectiveness.

By Felicity Bradstock for OilPrice.com

Source: OilPrice.com