China's oil supply is facing risks, which need to be solved mainly through
domestic efforts, an oil expert said.
Zhu Jianjun, a researcher with China National Petroleum Corporation (CNPC),
China's largest oil producer, said at a forum on China's energy strategy
recently that it is not oil shortage but the uneven distribution of oil
resources that caused instability in the world oil market.
Soaring oil price is the first risk, Zhu said.
Rapid growth of the world economy has led to a sharp rise of oil consumption
in recent years. Conflicts and financial speculation also help to drive oil
price higher. Depreciation of the U.S. dollar is another factor for the oil
price hikes, he said.
According to statistics, China spent 43 billion US dollars importing oil in
2004 and the figure rose to over 50 billion US dollars in 2005.
Zhu predicted that China's spending on oil imports will keep rising as its
imports increase and international oil price remains at a high level.
Transportation also poses a problem for China's oil supply, Zhu said.
China now imports 140 to 150 million tons of oil a year, and over 70 percent
of the imports have to go through the Malacca Straits in Southeast Asia. As the
channel is now near its capacity, other channels have to be found, he said.
China imported some 110 million tons of crude oil in 2004, but only 9 percent
was shipped by Chinese oil tankers.
According to statistics of Shanghai Shipping Exchange, by October 2005 China
had more than 590 oil tankers with a combined capacity of only 12 million
deadweight tons.
To remove the risks, China must rely on increasing domestic oil and natural
gas supply as well as develop overseas sources to ensure diversified supply and
transportation channels, Zhu said.
China should establish its own oil strategic reserve system and early warning
system, improve energy efficiency and develop alternative energies to reduce oil
consumption so as to ensure oil supply security, he said.
