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CHINA, THIRSTY FOR OIL, LOOKS TO CENTRAL ASIAN NEIGHBORS

People’s Daily, April 20, 2010

With rapid economic development in China, energy shortages, especially due to the tension between oil supply and demand, have become increasingly common. Figures show the consumption of crude oil in China increased from 241 million tons in 2000 to 388 million tons in 2009, with an average yearly increase of 6.78 percent. And the imports of crude oil grew from 59.69 million tons to 199 million tons.

China's growing dependence on energy imports from only a handful of countries will intensify China's energy insecurity.

China is the world's second largest oil consumer and importer. Demand and imports will inevitably grow, while the production of crude oil has shown a downward trend, decreasing 0.4 percent in 2009, according to He Lunzhi, professor of economics with Xinjing University.

China was an oil exporter to Japan and other countries before 1992 and became an oil importer starting in 1993. But now China imports more than 100 million tons of oil and oil products every year. Besides the expansion of economic scale, the change in consumption structure is also one of the major factors driving oil demand, said Gao Xincai, president of the School of Economics at Lanzhou University.

While China has taken measures, such as improving the exploitation of oil, to increase oil output, resources are still limited. As of the end of 1999, the proven oil reserves totaled over 20 billion tons, but the remaining recoverable oil storage was only 2 billion tons. Furthermore, the increasing difficulty and cost in exploitation and the surplus labor caused by resource exhaustion also pose a challenge to China.

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