July 6, 2007
Weekly Trends in China/Energy | 2007/07/13 14:06
China's primary energy consumption rose by 8.4 percent in 2006, 6 percent more than the growth rate of global consumption, according to a report released by BP on Monday. China consumed 1.7 billion tons of oil equivalent in 2006, accounting for 15.6 percent of the world's primary energy consumption, the report showed. China consumed 350 million tons of crude oil, up 6.7 percent from 2005, while its oil output rose by 1.6 percent to 183.7 million tons in 2006. China's dependency on oil imports stood at 47 percent in 2006. China is also catching up in gas production and consumption. It consumed 55.6 billion cubic meters of natural gas, up 21.6 percent from 2005, and produced 58.6 billion cubic meters, a year-on-year growth of 17.2 percent. China's nuclear power output rose by 2.3 percent in 2006, and hydropower output by 5 percent, both higher than the world average growth of 1.4 percent and 3.2 percent respectively. According to BP statistics, China's coal consumption accounted for 70 percent of its total primary energy consumption, with oil consumption accounting for 20.6 percent, natural gas use for 2.9 percent, hydropower use for 5.6 percent, and nuclear power use for 0.7 percent.
China will use up to 350 million tons of oil this year, ten million tons more than last year according to State Development and Reform Commission (NDRC). High oil prices have affected the nation's energy budget and the country might replace oil with gas in some areas.
A Chinese expert has called for developing liquefied natural gas (LNG) and liquefied petroleum gas (LPG) to replace the expensive crude oil. LNG and LPG markets will have a promising prospect and LPG may face supply shortage in the long term according to NDRC Energy Research Institution.
China's demand for natural gas in the next 20 years will be between 227.54 billion cubic meters and 296.54 billion cubic meters. Its annual domestic production will be 120 billion cubic meters. Part of this demand natural gas will be filled by 60 billion to 70 billion cubic meters of gas piped from Russia and Central Asia, and the rest will be LNG from overseas. Therefore, the LNG market will have promising prospects and may face a supply shortage in the long term.
By now, China has three planned LNG receivers, in the Pearl River Delta, the Yangtze River Delta, and Fujian. CNOOC is the largest LNG project builder and investor. According to the plan, China will build imported LNG receiver projects with a combined capacity of 70 million tons/year by 2015 along its coastal areas, but most projects are not making any progress.
LPG consumption in China has seen annual growth of 14.9 percent. It is estimated that China may need 250 million to 300 million tons in 2010, and 400 million to 500 million tons in 2020. There will be a LPG shortage in the long term.
China's top oil companies plan to boost the supply of cleaner fuels such as natural gas to Beijing to help clear the capital's smoggy skies in the run-up to next summer's Olympic Games. China National Petroleum Corp. (CNPC), China's biggest oil and gas producer, plans to increase Beijing's natural-gas supply by 17 percent to 5.5 billion cubic metres in 2008. The increased supplies will help to replace coal used in water heaters and electric power plants and will substitute for coal gas in cookers. It will also power some buses and cabs in the city.
Sinopec, China's largest refiner, has upgraded its Beijing plant to produce cleaner fuels. The Yanshan plant, with 10 million tons of crude-processing capacity, is fully ready to produce gasoline and diesel to meet the Euro IV low-sulphur standard, after 5.7 billion yuan ($750 million) in new investments. Beijing will lead the country in adopting the Euro IV standard in 2008, which limits sulphur levels in gasoline to no more than 50 parts per million.
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