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 US dollar
is another factor for the oil price hikes, he said.
According to statistics, China spent US$43 billion importing oil
in 2004 and the figure rose to over US$50 billion 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.
(Xinhua News Agency May 28, 2006)