The mainland should boost its strategic oil reserves and push ahead with energy price reforms, President Xi Jinping said yesterday.

The measures were necessary to safeguard the nation's energy security, Xi told a meeting of the Leading Group for Financial and Economic Affairs.

"[We] should closely monitor the development of the international energy market," Xi was quoted as saying by state-run news agency Xinhua.

"And we have to expedite the improvement of strategic petroleum reserves, push forward energy price reform, overhaul oil and natural gas systems, and promote the development of non-conventional energy."

Xi also used the meeting to call for better integration of Beijing and its neighbouring cities.

Neil Beveridge, a Hong Kong-based oil and gas sector senior analyst at American brokerage Sanford Bernstein, said the sharp drop in oil prices presented "an incredible opportunity" for the mainland to boost its energy security by enlarging its strategic oil reserves.

He said the mainland's reserves of less than 250 million barrels were far less than the United States' 700 million barrels even though the mainland needed to import much more oil than the US.

But falling oil prices also presented a huge challenge for China to maintain output, let alone increase it to boost energy security, he warned.

He said some of the nation's oilfields were loss-making and it made more economic sense to shut them in favour of more imports.

"Energy security is important, but there are limits on what the Chinese oil majors can do to keep production stable and remain profitable," he said.

He projected the mainland's total oil output would fall 1 per cent this year, compared to annual growth rates of between 1.5 per cent to 2 per cent in the past two decades.

If his prediction were to come true it would be the largest decline since 1981.

Falling oil prices would put pressure on the authorities to cut state-regulated natural gas prices this year, Beveridge added.

The steering group also discussed how to foster integration and cooperation between Beijing and neighbouring Hebei and Tianjin .

Xi called for offloading the non-capital functions of Beijing to its neighbours, as well as restructuring economic activities and land usage in the region, in an "orderly, prudent but persistent" manner.

Xi also called for scrutiny of officials to check they had been implementing the decisions reached by the eight meetings of the leading group held over the past two years.