The China National Petroleum Corp. (CNPC), the country's biggest oil and gas producer, signed a 30-year contract with US Chevron Corp. to jointly develop a large gas field in southwest China's Sichuan Province. The 1,969-square-kilometer gas field, located in the northeastern part of Sichuan, has proven reserves of 175.97 billion cubic meters, making the CNPC-Chevron cooperation China's largest inland exploration project participated in by a foreign explorer.

China announced Tuesday the setting up of a national oil reserve center, confirmed by the National Development and Reform Commission. The center, the administrative body of the country's national oil reserve system, takes the responsibility of building and making use of the country's strategic oil reserves, the commission said in a statement. The center will also keep an eye on the movement of demand and supply of both domestic and international oil markets. The commission said the country has decided to establish four strategic oil reserve bases, in Dalian, Qingdao, Ningbo, and Zhoushan. All of them are on the coast. The first one in Ningbo, eastern China's Zhejiang Province, has already started to stock up on oil.

China and the United States, two of the world's largest consumers of oil, have agreed to cooperate on the use of their strategic petroleum reserves. The US and China agreed to strengthen cooperation on construction and management of strategic oil stocks. Coordinated use of strategic petroleum reserves increases energy security for net oil-importing countries during times of significant supply disruption.

China Guodian Corp., one of the nation's five leading power producers, has launched its first nuclear project in East China's Fujian Province. Several 1,000-megawatt generating units are planned for the plant. Third-generation nuclear power technology AP1000 from Westinghouse will be used. China has chosen the AP1000 technology for the country's four nuclear power reactors, two in Sanmen in Zhejiang and two in Haiyang in Shandong.

Sinopec, one of China's leading oil producers, announced it would import more refined oil from abroad while trying hard to increase production so as to ease the shortage at home. The company plans to import 500,000 tons of diesel oil in January 2008. In November it bought 287,000 tons of diesel from abroad, and the figure will rise to 423,000 tons for December.

The China Electricity Council (CEC), an organization representing the country's power industry, has recently submitted a proposal to the National Development and Reform Commission (NDRC) to raise electricity prices next year. The proposal said major coal enterprises in coal-rich provinces have issued a notice that new contracts for electricity coal in 2008 will include a price rise of more than 30 yuan (4.05 US dollars) a ton. This would result in a sharp increase in electricity costs.

Energy

On Monday, the National Energy Leading Group (NELG) officially published a draft of a proposed energy law on its website for public comment for a period ending on February 1, 2008. The draft stipulates that the government will establish a partially market-based energy pricing system, which will reflect supply and demand, as well as environmental costs. The earliest possible date for China's Energy Law to take effect will be 2009.

A major gas field in northwest China's Xinjiang Uygur Autonomous Region starts production on Wednesday. The gas field, located on the southern edge of the Junggar Basin, produces 1.5 million cubic meters of natural gas per day, which is expected to help ease energy shortages in northern Xinjiang. The gas field is the largest gas field in the Junggar Basin, a major region of natural-gas production in China.

Sinopec, China's largest oil refiner, has started providing crude oil to local private oil refineries in Shandong Province and inviting them to help raise the overall production of refined oil products in a bid to better ease the current shortages of oil supply around the country. The move came in response to the demand by China's National Development and Reform Commission (NDRC), which strongly urged the country's two big oil giants (Sinopec, or China Petroleum & Chemical Corporation, and PetroChina, or China National Petroleum Corp.) to make every effort to ensure a sufficient supply of refined oil products.

China will offer subsidies to domestic oil companies to offset high international oil prices amid efforts to ensure market supplies, according to National Development and Reform Commission (NDRC). Many gas stations across the country are experiencing shortages, with refineries unwilling to raise output in light of the low, government-controlled domestic fuel prices. The government will offer oil firms some profit rebates and scrap oil import duties to compensate them for losses at their refinery units.

China Petrochemical Corp. is among companies, including TransCanada Corp and ConocoPhillips, competing to build a pipeline that would allow the first commercial production of natural gas from Alaska's North Slope. North Slope gas reserves, estimated at 35 trillion cubic feet by the state, are currently inaccessible as there's no way to get the fuel to consumers.

China's energy consumption per unit of gross domestic product (GDP) dropped three percent year-on-year in the first three quarters of 2007, a senior economic planning official said on Thursday. The emission of main pollutants, sulfur dioxide and chemical oxygen demand (COD), also fell during the period from January to September, according to the National Development and Reform Commission.

China burned more than twice as much coal as any other country in 2006, 39 percent of the global total, a US environment group said on Wednesday. China was followed by the US, which burned 18 percent of the world's total coal, said the Washington-based Worldwatch Institute in an update to its Vital Signs Report. The European Union and India came in third and fourth place, accounting for 10 percent and 8 percent of total coal use, respectively. Demand for coal is growing rapidly in China, which accounted for more than 70 percent of the global growth in coal use in 2006 and for more than 60 percent of the rise in coal use over the past decade.

China will build a new strategic petroleum reserve in Wanzhou, a district in Chongqing Municipality in the southwest, once final approval is obtained from the central government. The Wanzhou District Government and the Sichuan Bureau of Material Reserves signed an investment agreement last Friday about launching a joint venture for building a new oil reserve base in Wanzhou, about 300 km away from Chongqing.

The Chinese government is to introduce a seven-billion-yuan (933 million US dollars) reward scheme aimed at encouraging companies around the country to conserve energy and reduce emissions. The plan comes as part of a 23.5-billion-yuan package announced Monday by the Ministry of Finance to promote energy efficiency and reduce pollution. Zhang Shaochun, vice minister of finance, said the rewards would be granted to enterprises that fulfil the requirements in reduction of emissions and would be used to support technical innovation.

Energy

China will likely achieve, and may even exceed, its target to obtain 15 percent of its energy from renewables by 2020, according to a new report by an environmental group, the Worldwatch Institute. If China's commitment to diversifying its energy supply and becoming a global leader in renewables persists, renewable energy could provide over 30 percent of the nation's energy by 2050. China is poised to become a leader in renewables manufacturing, which will have global implications for the future of the technology.

China Huaneng Group has signed a deal of 60 billion yuan (US$8 billion) with China Guangdong Nuclear Power Holding Co. (CGNPC) to build four one-gigawatt pressurized water reactors in coastal Shandong province. A 200-megawatt high-temperature gas-cooled reactor will start up by 2013 at the same Shidaowan site, the firm's first nuclear power plant. If this is a success, the company plans to install more of the reactors, which it says were developed entirely by Chinese scientists. They will reach a total capacity of up to 3.8 gigawatts.

Many filling stations across China are experiencing shortages, with refineries unwilling to raise output in light of low domestic prices. Experts have said that the government should reform oil pricing to reflect international levels. PetroChina has ordered its subsidiaries to run at full capacity and exceed output targets and will buy more fuel from other local refineries, boost imports, and curb gasoline and diesel exports to ensure the domestic supply.

China's largest state oil and gas company, CNPC, and Russian gas giant, Gazprom, have reached a consensus on the pricing of natural gas to be piped from Russia to China. Russia will pipe 68 billion cubic meters of natural gas to China each year by 2020, according to Russian energy chief Viktor Khristenko. The negotiations on Russian gas prices "would not be influenced by China's low natural gas import prices," said the chairman, declining to elaborate.

China will import 10 million tons of liquefied natural gas (LNG) annually by 2010 as domestic demand soars with more LNG projects beginning operation. The Fujian project will receive 2.6 million tons of LNG annually from 2009 from Indonesia's Tangguh gas field, while the Shanghai project is expected to take in three million tons a year from Malaysia from 2012. The country imported 680,000 tons of LNG last year after the first LNG project was initiated in south China's city Shenzhen.

Energy

China's first energy law draft calls for placing the entire sector under a single ministry-level body, a Ministry of Energy exclusively for the energy industry may be formed in March next year. Supervision of the energy sector now spreads across several government departments, which include the Energy Bureau of the National Development and Reform Commission (NDRC), the State Electricity Regulatory Commission, the State Administration of Coal Mine Safety, the Ministry of Water Resources, and the Ministry of Land and Resources. Such division of power has been hindering the implementation of energy policies.

US-based strategic investment and advisory company Thornton Asia Infra will invest between $450 million and $900 million to build several waste power plants in China over the next six months. Cities which can daily generate 2,000 tons of garbage, or with a population over 5 million, could be possibilities for the plant. The capacity of each plant will be 75 megawatts, which would require three units each capable of generating 25 megawatts.

According to General Administration of Customs, China exported 5.25 million tons of coal in October, a growth of 18.8 percent on the same month of last year as prices rise in international markets. This was only the second month which saw China's coal exports grow so far this year. The other month was July, when coal exports soared 26.2 percent year-on-year. China discontinued refunding of export duties on coal late last year in a bid to ensure domestic supply of the fossil fuel.

China will develop an annual production capacity of 500 million cubic meters of coalbed methane by the end of this year. The country's leading coalbed methane producer, China United, was confident of attracting more foreign investment, as it already owns abundant coalbed methane resources and has experience in exploration.

China plans to boost its natural gas production by 50 percent to 90 billion cubic meters by 2010 to meet increasing demand. Natural gas will then account for 5.3 percent of the nation's total energy consumption. China's natural gas output was 58.5 billion cubic meters last year. Gas production has seen a 14.8 percent growth since 2002.

Energy

China has begun damming the Jinsha River (a major tributary of the Yangtze River) to build the Xiluodu Hydropower Plant, the second largest of its type next to only the massive Three Gorges Project. With a designed installed capacity of 12.6 million kilowatts, it will be the third-largest of its type in the world. When complete, the dam will be 278 meters high with a reservoir containing 11.57 billion cubic meters of water. The project, being built with an investment of 50.34 billion yuan (6.76 billion US dollars), started construction in 2005 and is expected to be operational in 2015. It is also a subsidiary project to the Three Gorges Project in terms of flood control.

Construction began on the world's largest production base for magnetic levitation (maglev) wind-power generators in central China. The Guangzhou-based Zhongke Hengyuan Energy Technology Co., Ltd., invested 400 million yuan in building the base for the generators that can utilize winds with starting speeds as low as 1.5 meters per second. The frictionless maglev generator would cut the operational expenses of wind farms by up to half, keeping the overall cost of wind power under 0.4 yuan per kilowatt-hour. The base will produce a series of maglev wind-power generators with capacities ranging from 400 to 5,000 watts in the first half of 2008.

PetroChina, China's largest oil and gas producer, replaced Exxon Mobil as the world's largest listed company by market value on Monday as its share price surged 163 percent to close at 43.96 yuan on its first day of trading on the Shanghai Stock Exchange. The company's market value on the Shanghai bourse swelled to above the one-trillion-dollar mark, surging past Exxon Mobil, valued at 487.7 billion US dollars. It is the first time a company has been valued at one trillion dollars.

China has made a substantial move to advance the development of automobiles powered by new energies amidst concerns about energy conservation and environmental protection. A new regulation regarding the qualifications of manufacturers for automobiles powered by new energies was promulgated by the country's top economic planner, the National Development and Reform Commission (NDRC), after seven months of public discussion. New-energy automobiles were defined by the regulation as hybrid cars: battery electric vehicles (BEV), fuel-cell electric vehicles (FCEV), hydrogen-fueled vehicles, and vehicles powered by other new types of fuel.

The China National Petroleum Corp. (CNPC) has signed a deal with the Tianguan Group, a major ethanol maker based in Henan Province, to invest in ethanol production as it tries to expand in the renewable energy sector. Producing ethanol from non-grain materials demands more complicated technology and more investment. With CNPC's investment, Tianguan can overcome technology obstacles or conduct mergers and acquisitions to obtain the technology needed.

In China, the prices of refined oil products are set by the central government, the refiners—private or local-government-owned—find it unprofitable when the price of crude is high. Soaring global oil prices have led to small refiners drastically cutting down on production, forcing Sinopec to fill the void. But because of capacity limitations at its plants, there is a rising gap between demand and supply. This year, Sinopec may import more oil products from abroad if necessary. The company imported 60,000 tons of gasoline in September and sold it at a lower price.

On Monday, workers completed a tunnel under China's Yangtze River for a major gas pipeline that will run from the southwest province of Sichuan to Shanghai in east China. With a diameter of 3.08 meters and a length of 1,405 meters, the tunnel was laid about 20 meters beneath the riverbed and connects two gas wells on each bank of the Yangtze in a section of Yichang City, Hubei Province. The 2,203-kilometer pipeline, with the mainline extending 1,700 kilometers, is another "energy artery" to fuel the booming but energy-insufficient eastern areas following the first west-east gas project. The pipeline is expected to channel 12 billion cubic meters of natural gas annually from Sichuan's Puguang gas field to central and eastern regions, including Chongqing Municipality, the provinces of Hubei, Anhui, Jiangxi, Jiangsu, and Zhejiang, and Shanghai.

China will finish its first deep-sea drilling rig, with a maximum working depth of three kilometers, by 2011, according to China National Offshore Oil Corp. (CNOOC). The maximum drilling depth will eventually reach twelve kilometers, which means it will be able operate in deep-water regions in the South China Sea, Southeast Asia, Gulf of Mexico and West Africa. The project, with a total investment of 4.5 billion yuan (599 million US dollars), will be carried out by the Shanghai Waigaoqiao Shipbuilding Co. under the China State Shipbuilding Corporation.

Construction is expected to start by the end of the year on a massive below-ground garbage incinerator plant that will also generate electricity for Guangzhou, the capital of South China's Guangdong Province. At a cost of 970 million yuan (US$125 million), the Likeng Garbage Incineration Power Plant will be able to incinerate more than 2,000 tons of domestic waste per day, almost one fifth of the city's total. It will be also capable of generating 200 million kWh of electricity a year. The plant will be put into production by June 2009. The project will adopt Danish clean garbage power transforming technology to reduce waste gas emissions.

Chinese oil giant CNOOC Ltd. has opened its first gas station in southern China's Guangdong Province. The station, in Huizhou City, covers 8,000 square meters, and the company has selected locations for 30 more stations and already received approval to open 20 of them in the city. The retail gasoline market is dominated by China's biggest oil companies, PetroChina Ltd and Sinopec Ltd, each of which has chains of hundreds of filling stations throughout the country.

Energy

Chinese biofuel experts have publicly disputed a report claiming the country's plan to produce more biofuels could lead to food and water shortages. "The report misunderstands China's policy and situation in the area of biofuel production from corn," said Li Shizhong, deputy director of the Institute of New Energy Technological Research at Tsinghua University. In the next five years, China will shift its biofuel strategy from using corn to sorghum, cassava and sweet potato for fuel production, high- yield plants that "are not used as a staple food."

China plans to build the country's first cross-province coal-bed methane (CBM) pipeline this year. The pipeline will start from Duanshi County, in North China's Shanxi Province, and end in Bo'ai County, in Central China's Henan Province, passing through Qinshui Basin, in Shanxi, according to China United Coal-bed Methane Co., Ltd., (CUCBM). The project is awaiting approval from the National Development and Reform Commission (NDRC) and expects to get the go-ahead later this year. The Duanshi-Bo'ai line will stretch 120km, with a capacity of one billion cubic meters. Total investment in the project will be 400 to 500 million yuan. The pipeline will also ease the natural gas supply shortage in Henan Province, which has a natural gas shortage of one billion cubic meters a year.

The China National Offshore Oil Corp. (CNOOC) will complete the construction of a wind power station some 60 km offshore, which will be first of its kind in the country, said general manager Fu Chengyu. The wind power station will have an installed capacity of 1,500 kw and is located in the Bohai Bay.

Construction of a project to utilize cold energy from liquefied natural gas (LNG), which is being jointly undertaken by the China National Offshore Oil Corp. (CNOOC) and Air Products, of the United States, was kicked off in Putian City of Fujian Province, southeast China. This is the first use of cold energy from LNG to produce industrial gas products in China. Liquid products will be supplied to neighboring areas such as Fuzhou and Xiamen.