• Wednesday, November 25, 2015

China's reliance on oil imports fuels geopolitical tensions

Chen Man-nung and Staff Reporter 2013-02-04 08:50 (GMT+8)
A Sinopec facility in Tianjin. (Photo/Xinhua)

A Sinopec facility in Tianjin. (Photo/Xinhua)

China's reliance on oil and gas imports has been rising, forcing the country to scramble for control over overseas oil businesses and possibly heightening tensions in the Middle East.

The country's dependence on oil imports shot up to 58% in 2012, with a total of 284 million metric tons imported that year. Its dependence on natural gas imports has also jumped on an annual basis from 2006 to the current 29%.

The reliance on imported oil and gas is projected to rise further to 59.4% and 32%, respectively, this year, according to a recent report issued by the Economics & Development Research Institute under state oil giant Sinopec.

This growing dependence could prompt China to risk war and conflict by getting involved in a battle for control of energy-related businesses in countries such as Pakistan, Iraq and Algeria.

Since 2003, state oil companies CNPC, Sinopec and China National Offshore Oil have been investing in oil businesses located in Sudan, Venezuela, Iraq and Myanmar and have recently expanded into Algeria, Egypt and Iran.

The three companies acquired a total of US$25.4 billion in overseas oil and gas assets last year, making China the world's largest buyer of petroleum interests.

More recently, the Pakistani government has been planning to hand over the management of a deep-sea port at Gwadar to a Chinese firm, according to the BBC. The managerial control will result in the construction of pipelines that will directly transport oil from the Middle East to western China, sources said.

The Chinese Academy of Social Sciences projects that the risks China will face in its attempt to acquire oil and gas resources are set to increase.

Prolonged political instability in Iraq, the lingering tensions between Israel and Pakistan, as well as Western intervention in the Middle East have all placed safety and stability in the area into uncertainty.

The rise of developing countries has also squeezed the global energy supply. According to an International Energy Agency forecast, the Asia-Pacific region will emerge as the world's largest consumer of oil by 2020.

Furthermore, as Chinese and Indian reliance on oil imports rises to the IEA's projected 77% and 91.6%, respectively, by 2020, their increasing dependence could also fuel a geopolitical power struggle in the Middle East.

Who`s who »
Lin Jianhua (林建華) Lin Jianhua (林建華)

Lin Jianhua is the president of Zhejiang University, an expert in chemistry and education. Born in 1955, Lin is a native of Gaomi in Shandong province. He started his career as a teacher in Inner ...