State-owned oil companies face challenges as they ramp up production while dealing with rising development costs and declining activity.Recent exploration has found that reservoir permeability is low, which requires expensive technical investment to develop.As a result, in 2017, state-owned oil companies had to shelve exploration and development of reservoirs with complex geological conditions and shut down Wells with high production costs.The cut in drilling activity left oil production at just 190 million metric tons (3.85 million barrels) a day, down 6% from 2016 and a seven-year low of 1.Still, Beijing is trying to keep oil production steady amid expectations of higher oil prices and geopolitical tensions.