How much imported oil

What new foreign policy tendencies, links and contradictions could these choices produce? Morrison S Sergei Troush. These estimates are based on an average economic growth rate of 7 percent and exclude extreme scenarios in economic policy and performance.

Their conclusion is that even in the most conservative of these scenarios—where an average GDP growth of only 2. It was a moderate oil exporter during the s, but now, its three main oil producing zones—Daqing, Shengli and Liaohe, situated in the northern and north-eastern parts of the country—are considered to be nearing depletion, and can sustain their current level of production only with additional, sound investments.

The growth of the domestic supply of oil is primarily associated with the development of oilfields in Xinjiang province in western China, and the exploitation of offshore oil ranges in the East China Sea. By most estimates, both these sources—though they will probably increase output in the years to come—will fail to meet the growing demand. These factors make both the investment risk and production cost of the oil very high. Generally speaking, the reserves and potential capacities of these basins and of all Chinese onshore oilfields are currently viewed more modestly than in the late s, when they were sometimes compared to the oilfields of Saudi Arabia.

The capacity to extract offshore oil in the East China Sea, which is much more costly to extract than any onshore oil, is also below earlier expectations. Until very recently, the Chinese government, had actually excluded the possibility of such a growing reliance on imported energy from its strategic and security considerations.

This orientation stemmed from the premise that because of the sheer magnitude of its energy demands, China could hardly afford to not be self -reliant. However, with regard to oil and gas, the potential reserves of which are not as high as coal and will not be able to match the growing demand in the very near future, the situation is obviously changing. While striving to develop our own crude oil and natural gas resources, we have to use some foreign resources.

Import statistics are the first and most convincing sign. Though imports dropped substantially in , presumably as a result of the Asian economic crisis, the total volume of imports in was 27 mt kilobarrels per day. Given the temporary low price of oil, and forecasts that these prices will not increase drastically in the coming five years, Chinese investment in troublesome domestic oilfields is economically unfeasible.

Other indicators of a shift in oil strategy were the serious realignments in the oil industry and the reform of domestic oil prices that took place between One of the aims of these realignments was to create financially robust, strong and flexible oil companies capable of aggressive import policies and overseas investment. Along with this promotion, the companies were delegated the power to purchase operating rights and rental rights overseas, and to establish subsidiaries to undertake overseas oil exploration.

The government also gradually increased the state-controlled price of crude, and thus bolstered the oil producing companies with substantial financial resources for overseas exploration and development.

Beginning in that period, the overseas activity of Chinese oil companies became very visible. At a relatively rapid pace, they purchased small to medium oilfields in Canada and Peru and bid on projects in India, Indonesia, Papua New Guinea, Russia and Venezuela. The most fruitful year for Chinese oil purchases was What security challenges might be imminent for China after it becomes less self-reliant in terms of its oil supply?

Perhaps more importantly, what geopolitical choices are now under consideration as remedies to these vulnerabilities? There are two main trends that are of primary importance. For the coming decade, there will be no other substantial inflow of oil to the world market comparable to flows from the Middle East.

For the Middle East plus Venezuela , total share of world oil production is forecast at The second important trend is the significantly increasing oil flow from the Middle East to the Asian Pacific region, with China, Japan and Korea the main consumers.

According to the chart, almost every second barrel of crude oil produced in the Middle East in will head to consumers on the other side of the Strait of Malacca.

Henceforth, with such a heavy dependence on the Middle East for oil, U. Another challenge that China is facing in entering the world oil market as an importer is the growing regional competition among East Asian countries for crude oil. The situation in the global oil market is now rather beneficial for consumers. This is a result of low prices caused by an abundance of oil due to obvious over-capacity among the Middle East producers, and investments and technology being utilized to meet the growing demand.

At the same time, there remains a very real possibility that the amount of oil entering to the world market will gradually be outpaced by soaring demand—especially in East Asian countries. This tendency will continue to progress, given the obviously low pace at which countries such as China will be able to restructure their energy mixes.

In the period when the supply of oil will rapidly diminish, there is a very real and politically relevant possibility that Japan and China, as the greatest consumers of oil in East Asia, will become competitors.

To a certain extent, its own political and energy security is closely related to whether or not China will be satisfied or belligerent in terms of energy. There is another factor that could also exacerbate the competition for oil between China and other East Asian states. Chinese oil refineries are primarily set up to process oil with a low to medium sulfur content.

Facing the need to adjust itself to the increasing volume of Middle East oil with high sulfur content, China needs sound investment in its refinery sector. The geographic scope of Chinese oil development contracts expanded significantly after It has grown to include the potentially rich oilfields in Iraq and Venezuela along with fields of moderate to small capacity in Peru, Canada and the United States.

Although in political terms the pieces of the puzzle seem to fit, the economic aspect is much less encouraging. This is primarily because the majority of oil wells in the European part of the country and western Siberia have been in operation since the early s, and are now substantially depleted. They require serious and costly technological renovation in order to resume output equal to the previous level.

The bottlenecks this causes lead to energy shortages within the Russian Far East. Meanwhile, many experts consider the production cost of the new oilfields in Siberia—namely the West Sakha oil basin—far above any reasonable level.

Given all these considerations, one could assume that Russia cannot be a serious consideration in terms of supplying China with oil in the near future. Furthermore, Chinese investment in Russian oilfields is very unlikely. However, there is another equally, or perhaps even more important consideration that prevents China from being oriented—both financially and strategically—to the Russian energy base. This is the fact that China is reluctant to add energy dependency to its already existing political and security linkages with Russia.

At present, Russia and China are considering only one substantial energy deal—the extraction and transportation of gas from the Kovytkinskoye gasfield in the Irkutsk oblast of Eastern Siberia.

The project includes plans to build a kilometer pipeline running through Mongolia all the way to the eastern coast of the Shandong province of China. The pipeline project was supposed include Japanese and Korean firms as participating investors, with the terminus of the pipeline in Japan and Korea. Compared to Russia, Central Asian oil resources seem more promising for China.

The estimated oil reserves of the Caspian Basin are quite substantial—possibly as great as billion barrels—though most industry analysts support a more conservative estimate of 90 billion barrels. Under the terms of the contract, China will acquire the right to develop two oilfields Aktuibinsk and Uzen in exchange for its commitment to build a 3,kilometer pipeline from the oilfields to the Xinjiang province of China, and a kilometer pipeline to the border of Iran via Turkmenistan.

Many experts speculate over the true intentions of the Chinese in participating in these pipeline projects. Recent information regarding Chinese plans for this project is rather encouraging. Furthermore, construction of the pipeline from Shanshan to Luoyang in Henan province, and Pengzhou in Sichuan province, is in full swing. However, progress on the construction of what is strategically the most important part of the pipeline—the section extending from Shanshan to the Kazakhstan border—has not yet been reported.

A floorhand moves casing on a rack beside his Permian drilling rig Midland, Texas. Reports of the death of U. Not only did the United States reach a record-breaking If verified in survey-collected monthly data, it would be the first time in a month-long period that the United States sold more petroleum than it purchased abroad since EIA records began in Today the US leads the world in the production of petroleum products, including crude oil, petroleum liquids and biofuels with This month, the U.

The United States is poised to break 13 million bpd of production by early Keep in mind that in January of , US production peaked at On an annual average basis, U. EIA forecasts that net petroleum product exports will average 3. EIA expects that the United States will import more crude oil to fill the widening gap between refinery inputs of crude oil and domestic crude oil production in and EIA expects the rising price of crude oil, which started in the fourth quarter of , will contribute to more U.

EIA forecasts monthly domestic crude oil production will reach These values are increases from the most recent monthly average of