"China to import 140 mil tons of crude oil" reads the headline of a recent China View article.
BEIJING, Dec. 16 (Xinhua) -- China's crude oil imports are expected to reach 140 million tons in 2006, up 10.2 percent on last year, according to the Ministry of Commerce (MOC).
Liang Shuhe, deputy director with the Foreign Trade Department of the MOC, said that China's demand for crude oil would total about 290 million tons this year, of which 48 percent were imports.
According to Liang, China's total output of crude oil is expected to reach 183 million tons in 2006, with 7.40 million tons for exports.
Liang said the fast growth of the economy has forced China to depend more and more on imports because of the limited domestic production, predicting that the steady increase in imports was likely to continue.
Statistics from the MOC show that China's crude oil imports increased by 14.1 percent in the first ten months of this year to reach 120 million tons.
The Chinese government removed tariffs on oil imports in November and opened its domestic oil market to foreign companies in December to cut the cost of oil imports.
I found this piece, posted to a recent article link roundup at The Oil Drum, noteworthy for two reasons.
First, it confirms the conviction, held among energy watchers and global/economic strategists alike, that America is now in direct competition with China for scarce natural resources. Hydrocarbon energy resources being chief among them.
Second, I was struck by the date of the article, December 16, 2006. It seemed to be a year to the day since I had written up an interview with mining consultant Dave Feickert which broached that very subject.
Mr. Feickert's message to readers was that despite a recent string of horrible coal mining accidents, China would have to continue relying on coal to meet their energy needs or increase their purchases of oil and gas from abroad. Thus, Western auto drivers would be indirectly impacted by the safety issues afllicting China's coal mining industry.
Here is an excerpt from that interview, dated December 16, 2005:
So for now, you see mainly a continuation of heavy coal use? You’ve made the point that any shortfalls in coal supply could result in China increasing their purchases of oil and gas from various sources around the globe. Please discuss this point.
China will have to rely on coal, or it will have to buy much more oil and gas off the world market. The effect on the global price is already apparent, with China making up around half of increased global oil demand, something few expected.
Unpredicted, except by a few energy analysts was also the lack of supply, which has been critically restricted by the complacency that sets in during periods of low prices, the poor judgements made by the US and the UK in Iraq, the restrictions on foreign investment in the Middle East and the fact that the oil and gas reserve base has been steadily moving eastwards anyway, as Western (mainly US, UK) oil depletes and Mexican fields matures. Hurricanes do not help either; nor do refinery explosions, as at BP’s major US facility recently.
On its current economic growth trajectory, China is expected to overtake the US as the biggest world energy consumer sometime after 2025 and also the biggest emitter of carbon dioxide (CO2), the main Greenhouse gas. Accordingly, it has been hunting for diversified energy supplies around the world, with its well-trained diplomats engaging in discussions globally. This, of course, has been different from the US, Japan or Europe, where economic power, vested in large energy companies has helped out. However, as has been seen in the case of Shell, their energy reserve bases are dwindling or they are over-stated.
Interesting to note that coal use presently accounts for 70 percent of China's energy supply, and demand for coal is expected to increase by over 8 percent in 2007.
That last bit of information comes from a Bloomberg News article on a recent hot IPO: China Coal Energy, which recently raised $1.69 billion in an oversubscribed share offering. It seems that both coal and oil are enjoying increased demand in China.