01-10-04
China may need $ 75 bn in investments annually over the next two decades to boost output of crude oil, natural gas, coal and build power plants, the head of Deloitte Touche Tohmatsu in Asia said. Half the amount is needed for the construction of power plants and transmission lines, said Manoj Singh, CEO for Asia Pacific at Deloitte, the world's second-biggest accounting firm.
China's economic growth is spurring demand for Siemens' generators, Areva's
nuclear reactors and Komatsu's mining equipment to meet soaring energy demand.
The Asian Development Bank earlier lifted its forecast for China's economic
growth this year to 8.8 % from 8.3 %.
"We need all forms and all sources of energy in China to meet its
needs," Singh said. "The government is going to fund a significant
part of the projects, with maybe some private-public partnerships."
China needs funds to increase domestic oil and gas reserves and build storage terminals and fuel pipelines, Singh said. China's government will initiallybe the biggest investor in energy, using money raised from bonds, commercial loans and project financing. Private investors will only pump money into the projects after they are assured of returns, he said.
Power producers are accelerating construction of generation plants in the next
six years, adding enough capacity each year to power Sweden. China suffered
power shortages this year as the economy expanded 9.7 % and electricity demand
shot up 16 %.
Shanghai
The government in Shanghai, China's biggest commercial city, plans to spend at
least 5 bn yuan ($ 604 mm) a year until 2010 to build power transmission lines
and transformers.
"In China, energy demand is rising very fast and its energy demand would
need a lot of infrastructural support," Chen Jiulin, managing director and
CEO of China Aviation Oil (Singapore) said in Beijing. "The current
infrastructure is just not enough to meet demand."
China may award an $ 8 bn order for four nuclear reactors to an overseas supplier such as Areva, Westinghouse Electric or Siemens as part of the world's biggest nuclear power construction program, Yu Jianfeng, a director at China National Nuclear Corp., which operates the nation's reactors, said at the World Energy Congress in Sydney.
A single foreign bidder may be chosen to build the four reactors, with work
starting by 2007, Yu said. China Nuclear and affiliate Guangdong Nuclear Power
plan to build a further four reactors to supplement the 11 already operating or
under construction in China, he said.
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China's oil companies are stepping up efforts to find oil and gas after crude
oil prices rose, and boosted costs for China, the world's second-largest energy
user, lagging only the US.
"I don't think they've been as aggressive as they are now," said Bruce
Schulberg, a lawyer, who advises companies on investment in China's energy
sector at Jones Day in Beijing.
Crude oil futures in New York have risen 68 % in the past year. China's oil
demand may grow by 510,000 bpd next year, accounting for 28 % of the world's
growth of 1.82 mm bpd, the International Energy Agency said in July. China's
three largest oil companies -- PetroChina, China Petroleum & Chemical Corp.
and CNOOC Ltd. -- are boosting spending by at least 9 % this year on oil and
natural gas exploration and production.
Costs
Rising oil prices, which boosted earnings of the companies in the past year,
also raised the costs for the companies as they step up efforts to find more
oil.
"China started to seriously analyse international oil-price trends two
years ago as our demand for oil increases," Zhang Guobao, Vice Chairman of
China's National Development and Reform Commission, the nation's top economic
planning ministry, said in Beijing. "China's government will push for the
construction of more oil and gas infrastructure."
China in the next 20 years will complete construction of an additional
100,000 km of main oil, oil products and gas pipelines, Zhang said at the China
International Petroleum and Petrochemical Industry Summit.
Source: Bloomberg