*China's Growing Energy

Appetite

Energy supply (oil)

Critical issues in developing

Foreign relations about energy security

Prospects for the energy sector

Secure energy supply

Conclusion

*Overview

*Energy outlook

In 2010, China’s crude oil production has increased

to 4.1 million b/d (203 million tons)

China’s total oil demand in 2009 averaged around

8 mb/d (385 Mt)

China is highly dependent on the Middle East,

which accounted for more than 50% of the total

crude oil imports in 2011, followed by Africa

(around 24%). By country, Saudi Arabia (20% of the

total) was the biggest import source of crude oil in

2011

*Oil

National Oil Companies (NOC):

China National Petroleum Corporation (CNPC);

China Petroleum and Chemical Corporation

(Sinopec);

China National Off shore Oil Corporation (CNOOC);

China National Chemicals Import and Export

Corporation (Sinochem).

*Oil Company Operations

• 70% of China’s domestically produced crude oil is

transported through the pipelines.

• The China-Russia spur of the East Siberian oil

pipeline

• China-Kazakhstan oil pipeline

• China-Myanmar oil pipeline

*Ports and Pipelines

Phase 1: 1978 - 1992

Self-reliance and self-sufficiency

Phase 2: 1993 - 1999

Production of oil can no longer meet domestic demand

Phase 3: 2000 - 2008

“Go global” starts to become the main slogan and

government encourages firms to go abroad

Phase 4: 2008 - present

“Go abroad and buy,” is the response to the financial

turmoil that began in 2008

*The Development History

of China’s Oil Industry

A persistent supply-demand gap

Low energy efficiency

Artificially low electricity tariffs

Insufficient capital investment

Unproductive state-owned enterprises

*Critical issues in developing

the energy sector

o Middle East

On the issue of energy security, China relies mainly on

Persian Gulf exports.

o Japan and Korea

China does its best to stabilize exports to Japan and

Korea;

Since China lacks strategic entrepot refineries, it relies

heavily on refineries in Singapore, Japan, and Korea.

*Foreign relations about

energy security

o Russia

the Eastern Siberia–Pacific Ocean oil pipeline

o Australia

PetroChina signed an A$50 billion deal with American multinational petroleum company ExxonMobil to purchase liquefied natural gas from the Gorgon field in Western Australia

o Central Asia

oil pipeline from Kazakhstan;

Central Asia–China gas pipeline.

*Foreign relations about

energy security

Foreign investment

to meet China’s future capacity requirements, the

government announced that at least 20% of this

development would still be financed from abroad

Governance structure and enterprise reform

there exists a problem in the delineation of the

responsibilities of central and local government.

Impact of WTO membership

China has to follow the international rules governing

competition and trade

*Prospects for the energy

sector

increasing production of natural gas and nuclear

power

developing clean energy technology to generate

gasoline and diesel from coal

increasing the use of other renewable energy sources

such as wind power and solar energy

enhancing the existing oil and natural gas supply

sources

diversifying import routes by reducing import

dependence from the Middle East

*Secure energy supply

increasing imports from Central Asia and Russia in order to reduce transportation risk

strengthening energy exploration and production (E&P) of new oil fields domestically

encouraging international cooperation in offshore oil exploration and production

increasing the number of Strategic Petroleum Reserve sites

raising mandatory stockpile requirements for major oil firms

*Secure energy supply

“is at a disadvantage as it

is not an Arctic state but

is still keen to have the

right to access natural

resources.”

*Eye on the Arctic Sea?

Energy policy will continue as part of foreign

policy as long as China’s economy continues to

grow well…

*Conclusion