June 08th, 2012 | Global Times New energy on spotlight
The strategy of seeking energy sources overseas would not guarantee China’s energy security, and the development of new energy needs the participation of private investors, experts said yesterday at a business forum in Beijing.
“Going global is essential, but don’t count on it to tackle the problem of energy security in China,” said Chen Weidong, chief energy researcher with China National Offshore Oil Corp (CNOOC), China’s third largest national oil company.
Relying solely on exploration within China cannot meet the country’s increasing demand for energy, he said during an energy session of the APEC China CEO Forum organized by the China Council for the Promotion of International Trade.
China has a huge demand for energy to fuel its economic development.
The National Development and Reform Commission approved on April 21 an acquisition plan of China’s top oil company Sinopec to buy a 30 percent stake in Portugal’s Galp operations in Brazil which will allow the Chinese company to further expand and bring in an additional daily output of 21,300 barrels of oil equivalent (BOE) by 2015 and 112,500 BOE per day in 2024, according to Sinopec.
“We will buy assets on a large scale,” Jiang Jiemin, chairman of PetroChina, was cited as saying by Bloomberg News on March 30.
PetroChina, China’s second largest oil company, reportedly also plans to invest at least $60 billion this decade in overseas oil and natural gas assets to increase output.
But simply counting on these overseas acquisitions to bring oil home to ease supply is not realistic, Chen said. Less than 10 percent of the overseas output could be brought home, he said, citing historic findings with large multinational oil companies such as Exxon and Shell.
The expensive transportation costs and regulatory hurdles might hinder supply of overseas oil to China, he noted.
China also has the option to explore unconventional deposits such as oil sands and shale gas, Wu Guodi, chairman of China International Energy Sources Group Co, said at the forum.
The country recently opened the shale gas market to private investors. The Ministry of Land Resources announced on May 17 that any investors with registered capital of over 300 million yuan ($47 million) are qualified for the second round of public tendering for shale gas exploration in China.
But opening the market is not enough, as the projects need to be profitable to attract private investors, Chen said.
China needs to adopt a market-driven natural gas pricing mechanism, break the monopoly of State-owned companies and ensure a level playing field for private investors so as to attract private capital, he said.
China will drive as much as one-quarter of the world’s incremental demand for energy through the year 2030, according to a McKinsey report released in February.
The country’s energy consumption climbed 7 percent to 3.48 billion metric tons of standard coal equivalent, the fastest pace in four years, in 2011, the National Bureau of Statistics said in February.
Though no official statistics on the energy supply and shortage are readily available, China is under greater pressure to ensure energy supply this year, and the country needs to develop renewable energy including solar and wind power, Xinhua News Agency reported on January 11, quoting Liu Tienan, head of the National Energy Administration.
By Wang Xinyuan