20120630-IEA-Oil_and_Gas_Emergency_Policy_China_2012_update_19页_1mb

Summary of China's Energy Outlook, Oil and Natural Gas Situation

Core Content

China's energy landscape is dominated by coal, which accounted for approximately 70% of the country's Total Energy Consumption (TEC) in 2009. Oil and natural gas, while not the primary energy source, play essential roles in the energy mix. The TEC in 2009 reached around 2.15 billion toe, with oil representing 18% and natural gas 4%. Oil demand has been growing rapidly, driven mainly by the transportation sector, which consumed over 40% of oil in 2010 and is expected to represent 65% of total oil demand by 2035 under the New Policy Scenario (NPS).

China has been a net oil importer since 1993 and a net crude oil importer since 1996. In 2010, China imported 4.7 mb/d of crude oil, which accounted for 53.8% of its total demand. The Middle East remains the largest supplier, providing over 50% of China's crude oil imports in 2011, followed by Africa (around 24%). The key import countries in 2011 were Saudi Arabia (20%), Angola (12%), Iran (11%), Oman (7%), Russia (7%), Sudan (5%), and Iraq (5%).

China's oil production increased to 4.1 mb/d in 2010, exceeding 4 mb/d for the first time. The country's domestic oil production has been growing due to exploration in the Northwest and offshore areas, which saw increases of 60% and 24% respectively in 2009 compared to 2000. However, oil production in the Northeast has been declining.

The four major National Oil Companies (NOCs) in China are CNPC, Sinopec, CNOOC, and Sinochem. These companies control the domestic oil supply and are involved in both production and distribution. CNPC and Sinopec are the largest, with CNPC producing 2.1 mb/d of crude oil and 72.5 bcm of natural gas in 2010, and Sinopec producing 1.2 mb/d of crude oil and 12.5 bcm of natural gas. CNOOC's crude oil production was around 1 mb/d in 2010, with 80% from domestic fields.

China has been actively developing its oil supply infrastructure, including pipelines and ports. By 2010, China had 20,000 km of crude oil pipelines, with 70% of domestic crude oil transported via these. The country also has around 60 oil ports, with the majority of crude and oil product imports arriving at five main port areas: Ningbo, Qingdao, Hangzhou, Dalian, and Zhanjiang.

China has implemented a Strategic Petroleum Reserve (SPR) plan to enhance energy security. The first phase of the SPR, with four storage facilities, had a total capacity of 103 mb and was completed by 2008. The second phase, comprising eight sites, is expected to reach a total capacity of 207 mb by 2013, with two sites completed in 2011 and the Tianjin site expected to be completed in 2012. The third phase aims to boost total SPR capacity to 500 mb by 2020. While stockholding obligations for industry are under consideration, they are not yet formalized.

Natural gas production in China surged from 27.2 bcm in 2000 to 96.8 bcm in 2010, and an estimated 103 bcm in 2011, with a compound annual growth rate of 14%. Natural gas is mainly produced from nine basins, such as Tarim, Sichuan, and Ordos, accounting for 84% of recoverable resources. Unconventional gas, such as coalbed methane and shale gas, also represents a significant potential resource.

China began importing LNG in 2006 and became a net importer in 2007. In 2011, it imported around 4.42 bcm of natural gas, mainly from Australia, Qatar, and Indonesia. The country has also started constructing LNG terminals and interregional pipelines to enhance gas supply.

Key Points

• Energy Mix: Coal dominates TEC at 70%, followed by oil (18%) and natural gas (4%) in 2009.
• Oil Demand Growth: Rapid growth in oil demand, from 4.6 mb/d in 2000 to 8 mb/d in 2009, with projections of 12.2 mb/d in 2020.
• Import Dependency: China's oil import dependency reached 52.8% in 2009, with the Middle East providing over 50% of crude oil imports.
• SPR Development: China has completed the first phase of its SPR (103 mb) and is building the second phase (207 mb) to be completed by 2013, with the third phase aiming for 500 mb by 2020.
• Oil Companies: CNPC, Sinopec, CNOOC, and Sinochem dominate the oil sector, with CNPC and Sinopec being the largest.
• Natural Gas Production and Consumption: Natural gas production increased by 14% annually, with consumption rising from 24.5 bcm in 2000 to 130 bcm in 2011.
• Gas Imports: China imports natural gas in the form of LNG and through pipelines, with major sources being Australia, Qatar, and Indonesia.
• Gas Infrastructure: China has expanded its natural gas pipeline network and is constructing LNG terminals and interregional pipelines.
• Energy Efficiency and Policy: China has emphasized energy efficiency and diversification, with the "12th Five-Year Plan" setting targets for renewable energy, including hydropower, wind power, and solar power.

Key Figures

Key Natural Gas Data

• Gas in Total Energy Consumption: 2.2% in 2000, increased to 3.9% in 2009.
• Gas Consumption by Sector: Industry (50%), residential (20%), and electric power, gas and water (15%) in 2009.
• Gas Imports by Source (2011): Australia (5 bcm), Qatar (3.2 bcm), Indonesia (2.7 bcm).
• Gas Infrastructure: Expansion of LNG terminals and interregional pipelines to enhance gas supply.
• SPR Development: First phase (103 mb) completed by 2008, second phase (207 mb) expected by 2013, third phase (500 mb) by 2020.

Summary of Policies and Measures

• Energy Security: Emphasis on oil and gas supply infrastructure, including pipelines, ports, and SPR.
• Energy Efficiency: Government initiatives to improve energy efficiency and reduce dependency on fossil fuels.
• Renewable Energy Development: Targets set in the "12th Five-Year Plan" for hydropower, wind power, and solar power.
• Emergency Response: SPR is the main mechanism for oil emergency response, with plans for industry stockholding obligations in the future.
• Legislation: The NEA is working on the Energy Law and legislation for the National Petroleum Reserve (NPR).