China's oil industry should go abroad to shore up the nation's increasing oil shortage and ease its heavy reliance on imports, an industry expert urged.
"Oil enterprises should participate in international cooperation, share distribution of the world oil reserves and position itself where it should be," said Wang Tao, a former senior petroleum official.
He also said it is an important strategic measure for the country's political and economic security to acquire oil through cooperation with foreign countries with rich oil reserves in overseas exploration and production since the domestic oil reserves are waning.
The gap between domestic oil demand and production is enlarging. It is estimated that in the next decade, domestic demand for oil will rise by 4 percent a year, while production will increase by only 1.3 percent a year.
Most of the oilfields in the country have been operating for dozens of years, and it has become more difficult to maintain a high production level.
It is hard to make a breakthrough in oil production, unless new oilfields are discovered, Wang said.
China has been a net oil importer since 1993. Its oil imports accounts for almost a third of the country's total consumption, which has endangered economic development.
Wang said that energy production should grow at an annual rate of 3.5 percent to secure the nation's economic growth rate at 7 percent. The current annual growth rate of domestic oil production is only 1.67 percent, however.
To provide enough energy for future economic development, the industry should speed up implementation of the nation's going abroad strategy, making full use of the opportunities brought by China's entry into the World Trade Organization.
However, "in going abroad, it is important that domestic enterprises cooperate under the banner of China and avoid vicious competition by cutting prices,'' Wang said.
The country's oil giants are now investing in overseas oil exploration and production.
China National Petroleum Corp has 24 overseas investment projects in 10 countries and regions. It plans to acquire 20 million tons of crude oil through overseas production by 2005, nearly doubling the amount of last year.
Sinopec Group also plans to obtain 4 million to 5 million tons of oil through overseas exploration within the next four years.
China controls oil reserves of more than 400 million tons overseas -- 5 percent of its developable reserves at home.
(China Daily March 25, 2002)
