It was exactly one decade ago that China became a net oil importer. That makes it one of the late arrivals in the global energy game. Since then, however, its accelerating industrialization has made it increasingly dependent on imported oil. Today, China’s primary energy consumption amounts to a tenth of total global consumption, and it accounts for more than a tenth of the world’s carbon emissions. China has the largest coal reserves on earth; making its energy mix heavily dependent on coal. Oil makes up only twenty per cent of its overall energy consumption. It produces 3.3 million barrels a day (mbd) of oil and consumes 4.7 mbd with imports filling the gap. It currently spends around US$15 billion a year on oil imports, which constitutes 6 percent of its export earnings.
In this last decade, China’s oil consumption has grown 6 percent annually, while the growth in its oil production has been less than 2 per cent. For every percentage-point growth in its economy, China is projected to register an equal percentage growth in oil consumption. Moreover, although China’s industrial and commercial growth is in the east and south of the country, the onshore reserves of coal, oil and hydropower are located in the north and west. Production in its mature oil fields is stagnating, and has not been augmented in recent years by any new discoveries of energy resources. As a result, China faces a likely future oil supply deficit. By the year 2020, it is expected to be importing 8 mbd, which would be four times the projected domestic output in that year. By then, China would have become the second largest consumer of oil in the world–after the United States.
OIL IMPORT DEPENDENCE