SunSirs: Key Tasks of China's Oil and Gas Industry in 2026

During the '14th Five-Year Plan' period, in accordance with the requirements of ensuring national energy security, building a strong energy country and a new energy system, the oil and gas industry will be organized to consolidate the supply foundation, comprehensively deepen reforms, accelerate green transformation, foster new productive forces, and improve a resilient and tough oil and gas industry chain and supply chain.

On February 25, Liu Hong, Director of the Oil and Gas Department of the National Energy Administration, published a signed article, and put forward the key work related to the domestic oil and gas industry in 2026 focusing on six aspects: industry planning formulation, exploration and development, infrastructure connectivity, import guarantee capacity, market system construction, and green, low-carbon and digital-intelligent transformation.

Specifically, regarding the formulation of relevant plans for the industry during the "15th Five-Year Plan" period, Liu Hong stated that it is necessary to scientifically assess the international and domestic situations, plan important development indicators, major projects, and key reform measures, and basically establish a modern oil and gas industry system characterized by "sustained enhancement of supply capacity, efficient connection of pipeline networks and distribution systems, flexible and controllable reserve regulation, green and low-carbon production methods, and diversified and reliable international cooperation." At the same time, by improving the level of legal construction in the oil and gas industry and optimizing resource allocation, we will build a unified, efficient, open, and dynamic oil and gas market system with Chinese characteristics.

In addition, ensuring the supply of oil and gas resources, promoting domestic reserve and production increases, and strengthening import security capabilities remain key tasks in 2026. Domestically, in 2026, efforts will continue to increase the exploration and development of conventional resources in key oil- and gas-bearing basins such as the Ordos, Bohai Bay, Sichuan, Tarim, Songliao, and Junggar basins, maintaining a high level of investment intensity and capacity building efforts to ensure stable crude oil production and sustained and rapid growth in natural gas production. In terms of overseas imports, we will coordinate the two types of resources and two markets at home and abroad, expand all-round international cooperation, and strive to build a flexible and effective trade system.

Oil and natural gas are important basic energy sources and industrial raw materials, which are crucial to national economy, people's livelihood and energy security. We must follow the fundamental principle that 'the rice bowl of energy must be held in our own hands', continue to enhance domestic independent supply capacity, and rely on domestic resources to ensure the country's core oil and gas needs," Liu Hong emphasized.

Policy-level support is being provided explicitly. In mid-February, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued the "Notice on Preferential Import Tax Policies for Energy and Resource Exploration, Development and Utilization During the '14th Five-Year Plan' Period" (hereinafter referred to as the "Notice"). Focusing on two core directions: offshore oil and gas exploration and development, and natural gas import and utilization, the notice adopts dual policy measures of tax exemption and value-added tax refund to reduce the import costs of resources and related equipment in the oil and gas industry during the "14th Five-Year Plan" period.

The Circular proposes that import tariffs on equipment, instruments, special tools and supporting technical data required for exploration, development and emergency rescue imported for domestic marine self-operated projects shall be exempted; for domestic marine exploration Sino-foreign cooperative projects involving the aforementioned similar imported materials, import tariffs and import value-added tax shall be exempted. In addition, for natural gas imported through approved cross-border natural gas pipelines and liquefied natural gas receiving, storage and transportation facilities projects, the import value-added tax shall be refunded in proportion according to the type of gas source. For long-term trade gas, a fixed proportion refund shall be implemented, and for other gas sources, the refund shall be dynamically adjusted according to the proportion of price inversion.

A new policy not only reduces the costs of natural gas imports, exploration and development, but also provides a stable policy expectation for the development of the industry in the next five years," a natural gas analyst from an energy agency told China Business News. He said that the tax exemption policy in the Notice will accelerate the progress of domestic offshore oil and gas exploration and development, increase the domestic self-sufficiency rate of natural gas, and reduce excessive dependence on imported gas sources. Especially when international gas prices fluctuate sharply and cross-border transportation is blocked, the newly added domestic gas sources can serve as an important supplement, enhancing the stability and risk resistance of resource scheduling. In addition, the tax rebate policy for imported gas can also help enterprises hedge against cost pressures when international gas prices are high, and improve the flexibility of procurement and scheduling by combining long-term trade gas and spot gas.

In addition, the key tasks for the oil and gas industry in 2026 will also include accelerating the green, low-carbon, digital and intelligent transformation of oil and gas. Liu Hong proposed that efforts should be made to further promote the integrated development of oil and gas with new energy and other energy sources, and accelerate the transformation of oil and gas fields from "traditional energy producers" to "comprehensive energy suppliers" and "comprehensive carbon reduction service providers".

In early 2023, the National Energy Administration issued the "Action Plan for Accelerating the Integrated Development of Oil and Gas Exploration and Development with New Energy (2023-2025)". Against this backdrop, oil and gas enterprises have innovated new models for transforming oil fields into geothermal fields, green power fields, carbon storage fields, and more.

Lu Ruquan, President of the Economic and Technological Research Institute of China National Petroleum Corporation, once stated in an interview with China Business News that Yumen Oilfield is a typical example of a resource-exhausted old oilfield transforming into a clean power production base. He said that as an old oilfield developed in 1939, Yumen Oilfield has long been faced with difficulties in replacing oil and gas resources and pressure on production and operation. In recent years, the oilfield has launched the construction of a 1 million-kilowatt new energy base, quickly completed a 500,000-kilowatt photovoltaic power generation project with an annual power generation capacity of 800 million kilowatt-hours, and achieved its first turnaround from losses to profits in 18 years in 2022.

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