China's growing energy

1. * China's Growing Energy
Appetite

2. *Overview
 Energy supply (oil)
 Critical issues in developing
 Foreign relations about energy security
 Prospects for the energy sector
 Secure energy supply
 Conclusion

3. *Energy outlook

4. *Oil
 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

6. *Oil Company Operations
 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).

7. *Ports and Pipelines
• 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

8. *The Development History
of China’s Oil Industry
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

9. *Critical issues in developing
the energy sector
A persistent supply-demand gap
Low energy efficiency
Artificially low electricity tariffs
Insufficient capital investment
Unproductive state-owned enterprises

10. *Foreign relations about
energy security
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.

11. *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.

12. *Prospects for the energy
sector
 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

13. *Secure energy supply
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

14. *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

15. *Eye on the Arctic Sea?
“is at a disadvantage as it
is not an Arctic state but
is still keen to have the
right to access natural
resources.”

16. *Conclusion
Energy policy will continue as part of foreign
policy as long as China’s economy continues to
grow well…