Economy

Calls to tackle rising oil imports

By Wan Zhihong (China Daily)
Updated: 2010-08-23 07:35

BEIJING - China, which is set to import more than 55 percent of its oil needs this year, should seek greater diversification of oil imports, build more stockpiles and improve conservation to enhance energy security, said analysts.

The country will see a continuous increase in oil imports, as domestic production cannot keep pace with the fast growing economy, said Zhou Dadi, a researcher with the Energy Research Institute under the National Development and Reform Commission.

"We should have long-term plans to address oil security," he added.

Besides increasing exploration and development domestically, the country must make continuous efforts to diversify imports, he suggested.

Improving energy conservation will also help ensure oil security, he added.

As the world's two leading energy consumers, China may learn from the US to protect its oil security, said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.

"The two large economies both import more than half of their oil needs. The US experience is worth studying," he said.

US petroleum imports rose sharply in the 1970s as reliance on petroleum from the Organization of the Petroleum Exporting Countries (OPEC) grew.

In 2008, 46 percent of US petroleum imports came from OPEC countries, which showed a marked decline from 70 percent in 1977, according to US Energy Information Administration.

The US Strategic Petroleum Reserve is the largest global stockpile of government-owned emergency crude oil, according to the US Department of Energy.

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The Persian Gulf accounts for the biggest part of China's oil imports and while steps have been taken to boost imports from Africa and Central Asia in recent years China still "needs to do more", said Dong Xiucheng, deputy director of the Business and Management School at China University of Petroleum.

China has finished the construction of the first four national strategic oil reserves and is currently building the second batch.

The country's strategic stockpile now equals 30 days of imports, according to the National Energy Administration.

State-owned oil companies including China National Petroleum Corp and China Petrochemical Corp have also built up their commercial stockpiles. Some industry insiders have called for the government to pay more attention to stockpiles of privately owned companies.

Zhao Youshan, head of the China Chamber of Commerce's fuel distribution department, said the country may include oil held by private companies in calculating the nation's commercial reserves.

Imported oil accounted for more than 55 percent of the country's total consumption in the first half of this year, according to China Petroleum and Chemical Industry Association.

The country's oil consumption rose to 220 million tons in the first six months, a year-on-year growth of 15.1 percent.

China imported 19 million tons of crude oil in July, down from a record high of 22.27 million tons in June.

Part of the reason for the drop was refiners' high inventories as well as seasonal fluctuation, said analysts.

Last year, oil imports accounted for 52 percent of total consumption.