China is establishing a new state entity, comprising national oil producers and other state companies, to focus on the exploration of ultra-deep oil and gas reserves, reported Reuters, citing China National Petroleum Corporation (CNPC). 

This move is in response to President Xi Jinping's directive to bolster the country's energy security by developing "new productive forces". 

CNPC has stated that the formation of this new body is a strategic measure to consolidate expertise and resources to build a comprehensive industry chain.  

This chain will range from ultra-deep oil and gas exploration through to development and engineering. 

The entity will bring together state groups including Baowu, China Aerospace Science and Industry, CNPC, Dongfang Electric Group, Minmetals, Sinomach and Sinopec.  

Their collective efforts will focus on drilling for conventional resources in ultra-deep wells, reaching depths of up to 10,000m, particularly in the Tarim basin region of north-west Xinjiang. 

In addition to conventional resources, the group aims to exploit deep shale oil and coal-seam gas resources.  

As one of the world’s largest crude oil importers, China caters to around three-quarters of its oil needs through imports.  

The country has been investing heavily to sustain its domestic crude oil production above four million barrels per day, a threshold deemed critical for its manufacturing and military sectors. 

Despite a 2% annual output growth since 2018, achieved through deeper onshore drilling and accelerated offshore field development, state companies face challenges.  

These include declining yields at large, mature fields and the complexities and costs associated with extracting shale oil and gas. 

This week, China National Offshore Oil Corporation (CNOOC) started production at the Wushi 23-5 oilfield.  

Notably, it is said to be the first in the South China Sea to be powered from the shore, aligning with CNOOC's efforts to advance low-carbon operations.