China's crude oil output will fall 7 percent by 2020 - govt

BEIJING (Reuters) - China's crude oil output is expected to drop by 7 percent by 2020 compared with the previous five-year plan as output from some of the nation's largest, but oldest, wells falls, while natural gas supplies will rocket by almost two-thirds.

Under a plan covering the period 2016-2020 published by the National Development and Reform Commission (NDRC) on Tuesday, crude output will be around 200 million tonnes by 2020, equivalent to 4 million barrels per day (bpd). That would be down from 215 million tonnes in the 2011-2015 plan.

The drop reflects falling output at aging, high-cost fields as producers scale back production in a lower oil price environment. For the first 11 months of 2016, production was down 6.9 percent at 182.91 million tonnes, just under 4 million bpd.

Consultancy Wood Mackenzie, however, forecasts a decline of nearly 500,000 bpd in Chinese crude oil production over the next four years at 3.5 million to 3.6 million bpd.

"We don't see any large greenfield oil developments coming stream by 2020. As such, given the maturity and age of the main oil fields ... we forecast an ongoing decline in output," said Angus Rodger, Woodmac's upstream research director.

Meanwhile, the NDRC said natural gas supply would be 220 billion cubic metres (bcm) by 2020, compared with 134 bcm under the 2012-2015 five-year plan as Beijing prioritises the sector's growth.

The government is maintaining an earlier target for shale gas output at 30 bcm, or 13.6 percent of the total.

The government has said it will prioritise the expansion of liquefied natural gas terminals and will "appropriately" add new capacity. Annual pipeline capacity to carry gas will exceed 400 bcm, the NDRC said on Tuesday.

In the oil sector, pipeline capacity will be around 650 million tonnes for crude - equivalent to 13.1 million barrels per day - and 300 million tonnes for refined products by 2020.

China will also further improve fuel quality to cut emissions, aiming to roll out the "national six" grade for gasoline and diesel from 2019, after implementing "national five" specifications from this year.

"National six" has the same cap on sulphur content as "National five" but tighter limits on other pollutants such as olefins and aromatics.

Overall refining capacity will be capped but state-of-art new capacities will be "appropriately" expanded, as the world's second-largest oil consumer is already facing a supply glut, the report said.

(Reporting by Beijing Monitoring Desk, Dominique Patton, Josephine Mason and Chen Aizhu; Editing by Christian Schmollinger)