Practice and reflection on the “integration of exploration and production” system for oil and gas: a case study of China National Petroleum Corporation

The “integration of exploration and production” system is a significant management initiative in China that innovatively consolidates the previously separate oil and gas exploration rights and mining rights. It fundamentally resolves the legal issues of producing hydrocarbons during the exploration phase, aligns with the principles of oil and gas exploration and development, and promotes the integration of upstream exploration and production as well as the integration of production increase and reserves growth. However, numerous issues still require clarification. Based on an analysis of the background of the “integration of exploration and production” system for oil and gas, this paper summarizes the reported blocks available for production and the practices and effectiveness of mining rights management within China National Petroleum Corporation （CNPC） since the implementation of the system. It is concluded that the “integration of exploration and production” system has addressed long-standing issues in the management linkage between exploration and production at CNPC, achieving progress in three key areas: comprehensively clarifying the inventory of mining rights, facilitating the orderly transition from the exploration rights phase to the mining rights phase; establishing and improving review and early warning mechanisms to accelerate the pace of conversion from exploration to production; implementing a refined management model to standardize the order of oil and gas exploration and production. Nevertheless, the current system still faces several challenges, including: reporting deadlines that do not conform to the exploration and development cycles of complex reservoirs such as unconventional oil and gas and ultra-deep resources, making orderly linkage between exploration and mining rights difficult; the lack of specific policies for blocks that cannot be converted to production due to low-grade resources or other reasons, hindering the conversion from exploration to production; and poor coordination in land use approval procedures for some blocks, impeding compliant management. This paper proposes three recommendations for improvement: stipulate different conversion deadlines for various special circumstances to ensure orderly linkage for all well types; allow enterprises to suspend or extend deadlines for cases where conversion cannot be completed on schedule, ultimately accelerating the conversion pace from a long-term perspective; and strengthen the coordination and refinement of supporting systems for the “integration of exploration and production” to ensure the orderly conduct of oil and gas exploration and production.