State-owned Chinese oil company PetroChina announced this Thursday that it pumped 2.4 million barrels of oil per day last year - overtaking Exxon Mobil's 2.3 million bpd to be the world's largest publicly traded producer of oil.
According to a report by Bloomberg BusinessWeek, the 13-year-old company managed to achieve this feat by squeezing out more from China's aging oil fields, as well as outspending Western companies in acquiring more petroleum reserves in countries like Canada, Iraq and Qatar.
PetroChina's oil output also managed to increase by 3.3 percent in 2011, as compared to Exxon whose production fell 5 percent.
"We must push ahead," said PetroChina's chairman Jiang Jiemin during a conference in January.
"Major development indicators of the existing oilfields continued to improve... which further strengthened the basis for the stable production of existing oilfields," added the company in a statement on Thursday.
PetroChina was formed with the distinct purpose of securing more oil for the nation's growing economy. The Chinese government owns 86 percent of the company and the nation uses nearly every drop of oil PetroChina pumps. According to Bloomberg, PetroChina's oil production could double between 2010 and 2035.
"There's a lot of anxiety in China about the energy question," says energy historian Dan Yergin. "It's just growing so fast."
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Exxon Mobil, on the other hand, has seen oil production drop so significantly that it has droped behind Rosneft, the Russian energy company, as the third largest oil producing company.
Still, some analysts do not believe that it is all bad news for Exxon, particularly as its profit earnings continue to soar on higher prices. Last year, Exxon Mobil's profits jumped by more than 40 percent despite producing less oil.
On the contrary, PetroChina's net profits dropped by 5 percent in 2011 to $21 billion, despite producing more oil.
"You have to ask yourself: What is the purpose of PetroChina? It is to fuel China. That's it. Although they're a public company, I'm very skeptical that they have any interest in shareholder value creation," noted Morningstar analyst Robert Bellinski.
Julian Jessop, a commodities economist at Capital Economics, also said that the news was not reflective of the overall oil production between Chinese and US oil companies, particularly as the US oil industry haD more producers competing against each other.
"If you look at total oil production, the US is still quite a long way away, and produces twice as much as China does," said Jessop in an interview with AFP.
But Western companies should be concerned by Chinese global oil expansion, said analysts, as Chinese oil companies such as PetroChina continue to buy up the major oil supply lines.
"You now have to outbid them," says Argus Research analyst Phil Weiss. "If you can't, you're going to have access to fewer assets."
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"Even if the economy slows, Chinese demand is probably not going to drop that much because it might be that the additional oil they import is added to reserves rather than used for current consumption," added Jessop.
"So the pressure on companies like PetroChina to source more oil from wherever they can is going to remain very strong as well."