China, thirsty for oil, looks to Central Asian neighbors

16:08, April 20, 2010      

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With rapid economic development in China, energy shortages, especially due to the tension between oil supply and demand, have become increasingly common. Figures show the consumption of crude oil in China increased from 241 million tons in 2000 to 388 million tons in 2009, with an average yearly increase of 6.78 percent. And the imports of crude oil grew from 59.69 million tons to 199 million tons.

China's growing dependence on energy imports from only a handful of countries will intensify China's energy insecurity.

China is the world's second largest oil consumer and importer. Demand and imports will inevitably grow, while the production of crude oil has shown a downward trend, decreasing 0.4 percent in 2009, according to He Lunzhi, professor of economics with Xinjing University.

China was an oil exporter to Japan and other countries before 1992 and became an oil importer starting in 1993. But now China imports more than 100 million tons of oil and oil products every year. Besides the expansion of economic scale, the change in consumption structure is also one of the major factors driving oil demand, said Gao Xincai, president of the School of Economics at Lanzhou University.

While China has taken measures, such as improving the exploitation of oil, to increase oil output, resources are still limited. As of the end of 1999, the proven oil reserves totaled over 20 billion tons, but the remaining recoverable oil storage was only 2 billion tons. Furthermore, the increasing difficulty and cost in exploitation and the surplus labor caused by resource exhaustion also pose a challenge to China.

The energy situation forces China to consider energy expansion in the context of economic globalization, which requires optimization of China's structure of oil imports. Figures show that more than 70 percent of China's imported oil was from the Middle East in 2009. Due to some factors, such as transportation and geopolitics, security risks exist in China's overseas oil. In addition, the turbulent situation and Western countries' rivalries in central Asian countries, which include China's neighbors, also pose threats to China's energy security.

Coal accounted for 76 percent of China's energy consumption in 1990, but dropped to 67 percent in 1999. Conversely, China is growing more and more dependent on oil for energy, with the proportion up from 17 percent in 1990 to 23 percent in 1999. With steady economic development, oil consumption will increase dramatically.

In 1999, oil consumption reached 200 million tons, but the output was only 160 million tons and imports accounted for over 40 million tons. It is expected that China will import more than 200 million tons of crude oil this year.

Huge potential in energy cooperation with five central Asian countries

China shares more than 3,300 kilometers of common borders and a number of cross-border ethnic groups with Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan and Turkmenistan, which have a geopolitical significance because of their vast energy resources. So China must enhance energy cooperation with these five countries to secure economic security and sustainable development, according to He Luzhi.

Fossil energy reserves of the five central Asian countries surpassed 30 billion tons. But China has only 1.72 billion tons of crude oil reserve. China needs a large amount of liquid fuel to meet the demands of the rapidly-developing auto industry. According to the International Energy Association analysis, about half of China's oil needs will be met by imports this year and the figure will reach 80 percent in 2020.

The differences in energy resources between China and the five central Asian countries show there is great potential for cooperation, said He.

Central Asian countries regard China as an ideal partner due to China's steady economic development. The Shanghai Cooperation Organization, set up in June 2001, which includes China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan, aims to promote the six countries cooperation and development in safety, economy, energy and other fields.

In addition, China's western development and project of gas transmission from west to east have become a continental oil bridge connecting Central Asia, the Far East and Northeast Asia.

By People's Daily Online


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