Chinese Overseas Oil Production Booming

China produced 4.3 million barrels a day from its own domestic sources in 2011, according to the U.S. Energy Information Administration (EIA), and another estimated 1.5 million barrels a day from its foreign holdings. By 2015, according to an estimate from the International Energy Agency (IEA), China will realize production of 3 million barrels a day from its foreign holdings. That is more than the 2011 totals of Kuwait, Qatar, Norway, Venezuela or even Brazil.

Only the most naive of observers would expect the Chinese to load cargoes from the U.S. or Angola and ship them to China. The Chinese oil companies will sell their overseas production on the open market and use the cash to pay for imported crude. But this will give China a real boost in buying power on the international market, and it will help the country meet its growing demand for petroleum products. Spot prices should not be affected a lot unless production from non-Chinese fields falls significantly.