China demand not to blame for higher oil prices: official

Sydney (Platts)--12Dec2006

China's growing energy demand is not to blame for higher world oil prices
and does not pose any threat to global energy security, Zhang Guobao,
vice-chairman of the government's key energy regulator, the National
Development and Reform Commission, told an International Energy Agency seminar
in Sydney on Tuesday.
China's oil imports decreased in 2005, but global oil prices kept rising,
Zhang said. This year, the Asian giant's imports have increased marginally,
but the global oil price has dropped slightly.
"It is obvious that the view attributing [the] oil price hike to China's
oil import growth fails to grasp the underlying factor that has led to the
rise of oil," Zhang said. "It is also a vicious attempt to deliberately
exaggerate the impact of China's increasing energy demand on the global energy
market," he added.
China needs to import oil and gas to supplement domestic production, but
China's imports will "never impose a threat to world energy security in the
short or long term, in terms of either consumption volume or import volume,"
Zhang said. China's oil consumption per capita in 2005 was 0.242 mt, around
half the world average, and its per capita imports were 0.1 mt, just a quarter
of the world average.
In 2005, China's oil consumption was 320 million mt (2.3 billion
barrels), of which 181 million mt was domestic production and 136 million mt
was net imports. China is currently the world's sixth largest oil producer and
third largest oil importer, accounting for 6% of world trade volume.
Over the period from 1978 to 2005, China's primary energy consumption
rose by 5.16% annually, underpinning an average GDP growth of 9.6%. The
nation's primary energy consumption totaled 1.55 bil mt of oil equivalent in
2005, with coal accounting for 68.9%; oil 21.0%; natural gas 2.9%; and hydro,
nuclear and wind power 7.2%.
Zhang said it was unfair to refer to China as only an energy consumer and
ignore the fact that it is a major producer, with a special energy mix
dominated by coal. China ranks as the world's second-largest primary energy
producer, at 2.06 billion mt in 2005. The nation's coal production in 2005 was
2.19 billion mt, accounting for 37.4% of the world's total, and it has 117
gigawatts of installed hydropower, ranking it first globally.
"It is an indisputable fact that China meets energy demand for
development by relying on domestic supply mainly," Zhang said. "It is both
partial and unfair to refer to China only as a major energy consumer, spread
the view that China's energy demand threatens world energy security, and to
ignore the fact that China is a major energy producer as well."
He added that China would continue to rely on domestic supply to meet its
energy demand, given its abundant coal resources and potential to increase oil
production. In addition, exploration for natural gas is at an early stage and
the nation is rich in non-traditional oil and gas resources.
Three-quarters of China's hydropower remains untapped, Zhang said. The
use of nuclear, wind and solar power, as well as power generation from biomass
is also still at early stages.
"There is a broad prospect for the development of alternative energies
such as fuel ethanol, methanol, dimethyl ether and coal liquefaction," Zhang
said. "We will stick to coal as the basis while pursuing diversified energy
development, and make best efforts to build an energy supply mix that relies
on coal as the major source, centers on electricity, and promotes the
comprehensive development of oil, gas and new energy."
Zhang said the Chinese government has formulated an energy policy which
gave priority to conservation, domestic supply, protecting the environment,
and strengthening international cooperation.
--Christine Foster, christine_foster@platts.com

For more news, request a free trial to Platts Oilgram News at
http://www.platts.com/Request%20More%20Information/index.xml?story or
subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=1_29&products_id=29