Abstract: The upstream petroleum industry in China has achieved remarkable success. The annual crude oil production of 2×10⁸ t is successively achieved under difficult resources conditions, and the natural gas production has achieved rapid growth, reaching 2 200×10⁸m³ in 2022. China has become the fourth largest gas producer in the world. Through exploring the exploration and development situation of oil and gas in China, this paper analyzes the theoretical and technical challenges faced by the upstream petroleum industry, and looks forward to the development prospects of domestic petroleum industry. China has realized oil-gas exploration and development in deep strata, deep water, and unconventional fields. It is predicted that China's crude oil output will be stable at 2×10⁸t, and natural gas production will be stable at 3 000×10⁸m³ in 2035. The development of the upstream petroleum industry in China faces theoretical and technical challenges from five major fields:deep strata, deep water, unconventional resources, enhanced oil recovery (EOR) of old oil-gas fields, and carbon capture and storage(CCS) or carbon capture, utilization and storage(CCUS) projects. The future development of petroleum industry will rely more on geological theories and technological innovations in exploration of deep strata, deep water, and unconventional fields. A new generation of theories, technologies, equipment, and efficient construction teams that are suitable for deep strata, deep water, and unconventional oil-gas exploration and development are the key to achieving the high-efficiency development with low cost. The advanced technology and equipment, which are applicable for deep layer, deep water, unconventional oil and gas exploration and development, as well as EOR of old oilfields and CCS/CCUS projects, will be essential to the development of petroleum industry in the future.