Oil firms shore up energy security

As global geopolitical instability intensifies and risks to critical energy shipping lanes escalate, China's major national oil companies are implementing a multipronged strategy to safeguard the nation's energy security.

China National Petroleum Corp, the country's largest oil and gas producer as well as distributor, is maintaining stable operations through its highly diversified supply chain, effectively mitigating external logistical risks.

Dai Houliang, chairman of the company, said during a recent news conference that global oil and gas supplies passing through the Strait of Hormuz currently account for only about 10 percent of the company's total operating volume.

"Despite global uncertainties and regional fluctuations, the company's overall operations remain entirely on track and normal," Dai said.

He added that the company has successfully built a robust and resilient energy portfolio, with approximately 90 percent of its crude oil processing and natural gas sales firmly secured through domestic production, international pipeline imports and supplies sourced from outside the Middle East.

In a coordinated effort, China Petroleum and Chemical Corp, better known as Sinopec, is also taking decisive action to counter regional risks.

The company is ensuring stable crude oil supplies by rerouting tankers to bypass the Strait of Hormuz, said Sinopec Vice-Chairman Zhao Dong.

Simultaneously, it is maximizing output of its coal-to-liquids facilities as an alternative energy source, employing a dual-track approach to hedge against geopolitical volatility, Zhao said.

China has built up an estimated 1.4 billion barrels in stockpiles that could be tapped if disruptions persist, according to Columbia University's Center on Global Energy Policy.

Erica Downs, a senior research scholar at the center, said China has spent the last two decades constructing and stocking its strategic petroleum reserves specifically for such contingencies.

Even in a worst-case scenario involving a total cutoff of Middle Eastern supplies, these stockpiles are sufficient to sustain the country for six months, said Downs.

Analytics firm Kpler said in a recent note, "China's goal is to ensure procurement options," highlighting the country's strategic priority of supply diversification.

Lu Ruquan, president of the CNPC Economics and Technology Research Institute, said China has forged a protective buffer with the strategic diversification, with immense reserve capacities and expanding land-based pipelines.

The country is also considering expanding the scale of cooperation in the natural gas sector with countries in Central Asia and Russia.

All these successfully shield the domestic energy sector from sea-based supply chain volatility, upholding the consistency of China's oil imports even if an extended blockade throws international markets into turmoil, Lu said.

Building on the momentum of a record-breaking 2025, China's crude oil sector has seen a robust start to 2026.

The National Bureau of Statistics said daily production averaged 606,000 metric tons through February, with high-intensity operations in the Bohai Sea and deepwater South China Sea projects continuing to drive significant growth volume as of mid-March.

Domestic crude oil production has maintained steady growth in recent years, with annual increments in oil and gas equivalents surpassing 10 million tons for nine consecutive years, said the Sinopec Economics and Development Research Institute.

Despite a reliance on oil imports, China's continuous growth of domestic supplies serves as the bedrock insulating the country from external volatility, said Cao Jianjun, chief expert at the think tank.

"As uncertainty becomes the new normal, we must counter external instabilities with our own internal certainty," Cao said.