China aims to diversify oil sources

Diversification is a golden rule of doing business, hence the saying: “Don’t put all your eggs in one basket.”

In recent years, China has been making aggressive efforts to diversify its sources of oil imports, in an apparent move to reduce the risk of increasing reliance on oil from the Middle East.

But in China ’s oil-security strategy, such variegation is not only

to reduce business risks but also for geopolitical reasons.
China was self-sufficient in oil consumption until 1993. Since then, the country has become increasingly reliant on imported oil to fuel its rapid economic expansion. This situation is unlikely to change in the future as proven oil reserves in the country are not nearly enough to meet expected demand.

In 2006, China produced 183.68 million tons of crude oil, up 1.7% from the previous year. Its net oil imports amounted to 162.87 million tons, up 19.6%. The total net imports included 138.84 million tons of crude oil, up 16.9%, and 24.03 million tons of oil products, up 37.9%, according to the Ministry of Commerce.

Thus last year China ’s dependence on imported oil rose to 47% of annual demand, or an increase of 4.1% over the previous year.

Industry analysts have predicted that in 2007, China’s crude-oil output will grow by less than 2%, while the country’s demand for both crude and oil products will rise about 6%. That means its dependency on imported oil will further increase this year.

Asia Times