CHINA’S oil giants aim to spend the most in five years in pursuit of higher energy output. But unlike global rivals investing in top-tier assets, China’s oil producers are trying to boost supply from fields that are either old and high-cost or new and challenging.

China’s big three — PetroChina Co., Sinopec Corp. and Cnooc Ltd. — are raising combined capital expenditure to about 517 billion yuan (US$77 billion), up 18 percent from last year. That’s almost back to levels seen before oil’s collapse in 2014.

Their spending plans contrast with global titans such as Royal Dutch Shell and Chevron Corp., which are keeping a tight grip on spending and returning cash to investors via dividends and share buybacks. Meanwhile, Exxon Mobil Corp. is pouring money into world-class assets that will raise output in the coming years, including Guyana, Papua New Guinea and Brazil, as well as the Permian Basin.

That’s not the case for the Chinese producers working mainly with costly wells and aging fields at home. PetroChina, the biggest, is focusing its exploration efforts in Xinjiang, where per-well spending could be 10 times higher than other fields, Huatai Financial Holdings estimates.

PetroChina plans to raise spending by 17 percent this year to 300.6 billion yuan, having overshot last year’s budget by 13 percent. Cnooc targets an increase of as much as 27 percent. Sinopec, officially known as China Petroleum & Chemical Corp., will boost capex by 16 percent.

The higher capex is likely to worry Sinopec investors, where the upstream business continues to lose money, Morgan Stanley said in a research note. Analysts at Jefferies said in their report that the refiner may not have the resources to economically justify its level of increase on upstream spending given that its production guidance is only 1.4 percent higher.

China’s reliance on oil imports has climbed steadily to over 70 percent as domestic production shrinks. (SD-Agencies)