China's total consumption of oil is expected to reach 350 million tons this year. Due to the soaring oil price on the international markets, the cost of the high consumption of oil is growing, said an official with theNational Development and Reform Commission(NDRC) last Saturday.
Jiang Xinmin, a specialist with NDRC's Energy Research Center, said on June 30 in Shanghai that China's annual oil consumption has been growing over eight percent since 2000. Last year saw 340 million tons of oil consumed, but the record will climb to 350 million tons this year. In contrast, the annual growth of domestic oil production remains slow at 1.5 to 2 percent.
As a result, China is increasingly dependent on overseas oil resources. Being a net oil exporter before 1996, China had to import nearly half of the oil consumed in 2005. However, oil prices have risen to US$70 a barrel from US$25 a barrel in 2003. Political turbulence in oil-rich regions could lead to even higher oil prices, he warned.
The surging oil prices put significant pressures on the domestic oil refinery industry. Although NDRC has adjusted the prices for refined oil more frequently and at larger scales since 2005, prices of crude oil still beat the upper limit of refined oil prices, making some regional refiners reluctant to operate at full capacity. Even refinery divisions of PetroChina andSinopecalso feel the pinch from the rising cost, according to Jiang.
However, he anticipated that if both oil prices and demand keep rising, natural gas may play a more important role as a substitute fuel in the future. China's natural gas industry thus has huge potential for further development, he said.