China Needs to Step Up Oil Exploration Overseas

While making oil imports to meet rising domestic demand, China should enhance its oil exploration overseas and build up a national petroleum reserve, a senior official suggested.

Addressing an ongoing seminar on development strategy for China 's oil and gas industry in the 21st century, vice minister of Land and Natural Resources Jiang Chengsong pointed out that China should take into consideration both insufficient domestic energy resources and the national economic security when formulating an energy development strategy for the new century.

Jiang noted that while relying on petroleum imports to make up for the domestic shortage in energy supply, China's oil industry should step up its efforts in oil-oriented venture explorations in neighboring countries to diversify supply sources. Russia and central Asian countries are all possible choices, he said. China has been conducting oil and gas exploration overseas since the early 1990s, but so far no significant progress has been reported.

China became a net oil importer in 1993, when its net imports reached 9.93 million tons. In 1999, the imports soared to 43.81 million tons.

Jiang stressed that the oil and gas sector is at the core of China's energy strategy, which is key to its economic development. China's current coal-dependent energy mix directly affects sustainable growth of the national economy. Yet to rationalize the energy mix in a short period of time has proved to be too difficult to achieve and exerted heavy pressure on domestic oil- gas exploration activities.

Coal now accounts for 71 percent of China's energy consumption, whereas the share of oil and gas is only 22 percent. In contrast, in developed countries, coal's share averages 26 percent and that of oil and gas is over 60 percent.

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