Government and Policy

China depending more on imported oil By Xiao Wan (China Daily)

Updated: 2010-01-20 08:20

China's oil imports will continue to see solid growth this year, with more than half of the country's total oil consumption coming from abroad, industry insiders said.

It is inevitable for the country - the world's second largest oil consumer - to see a robust increase of imports, as domestic production cannot keep up with rising demand, they said.

China's oil dependency reached alarming levels last year with imports accounting for 52 percent of total consumption, China Business News reported yesterday, citing Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission.

Importing more than 50 percent is a globally recognized level for an energy security alert.

The country's oil imports in 2010 are expected to grow five percent from a year earlier, and the proportion of imported oil consumed may further rise to 54 percent this year, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"Domestic production is already at its peak," he said. "Although domestic companies have accelerated their overseas expansion, the resources they already gain are still limited."

Customs figures showed that China imported 204 million tons of oil last year, while the country's total production was 190 million tons.

Lin's views are echoed by Han Xiaoping, chief information officer of china5e.com, a leading energy website in the country, saying oil imports would maintain a brisk growth in the future. However, importing too much would hurt energy security, he added.

According to a report by the Chinese Academy of Social Sciences (CASS), 64.5 percent of China's oil consumption is likely to be met by imports in 2020, with the gap between domestic consumption and production as the main reason.

Statistics from CASS showed that China's oil production is expected to stand at 177 to 198 million tons in 2010, and the figure would reach 182 to 200 million tons in 2015.

China's oil production will see a gradual decline after 2020, according to CASS.

China National Petroleum Corp, the country's largest oil and gas producer, said in a commentary in its online newsletter yesterday that the country's oil imports would be affected by many factors, such as rising global competition and volatile energy prices.

Chinese companies should avoid competing with their domestic peers in the international market, said the report.

Analysts said that China should further diversify its sources for importing oil to find a more sustainable supply. At present the Middle East, Africa and the Asia-Pacific are the three main regions that supply oil for China.