China’s Oil: Imports & Assets

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According to reports from China, Chinas oil imports may rise 6 percent this year, having risen 35 percent (to 122.7 million tons) last year. However, experts at the China-Montreux Energy Roundtable suggested that the current high oil price and supply shortage cannot be blamed on China, and that is has been caused by lack of investment in the refining industry, and in infrastructure such as distribution and transportation, when the oil prices were lower, and by economic activity worldwide.

In the meanitme, as oil prices remain high, China faces painful import bills it imported 45.7 percent of its crude oil consumption last year, and imports may rise to 360 million tons of oil by 2020, with overseas supplies accounting for 70 percent of demand, compared with 60 percent in 2010, according to the State Information Center’s China Economic Information Network.

As a result the government is planning to offer the big oil companies support in buying overseas reserves, and may set up a fund for this purpose. There has already been overseas activity, with the recent failed bid for Unocal, and last month’s US$4.18 billion takeover by China National Petroleum Corp., Chinas biggest oil producer, of Calgary-based PetroKazakhstan Inc., in China’s biggest purchase of energy assets so far. It seems that there will be more to come.

But oil is not the only source of energy used by China – 70 percent of energy needs are currently met by coal. However, China is trying to diversify its supplies, and is increasingly looking to renewable engery sources. The aim is to provide 15 percent of energy needs from non-fossil fuels within 15 years – up from 7 percent today – and 50 percent more than its previously stated goal of reaching 10 percent by 2020.

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