Lei Xiangping

    lagon235@163.com

    ALTHOUGH international crude oil prices have remained low for the last two years, the OPEC countries have vowed not to decrease output in order to maintain their market share and beat challenges from the momentum-gaining shale gas revolution in America, causing oil supplies to outnumber demand.

    Under such market conditions, China has increased its oil purchases to satisfy soaring domestic demand. The latest customs data show that China imported a daily amount of 7.4 million barrels of oil in April, surpassing America’s 7.2 million to become the largest monthly importer.

    Before the price rebounds, China should expand its national oil reserves in a cost-saving way. National oil reserves are very important to China’s security, especially in wartime when exterior supplies are cut off. But the data by China Petroleum show that China’s current oil reserves could only support the nation for 30 days while reserves in America, Japan, Germany and France would last for more than 90 days.

    In the first four months of 2015, China spent 280 billion yuan (US$45 billion) — an annual decrease of 43.1 percent — on 110 million tons of crude oil — an annual increase of 7.8 percent — which means China spent less money to buy more oil. According to a national plan, China will continue to buy oil to extend the reserves to 100 days.

    Recent market changes are also giving China more choices in terms of deciding what countries oil should be imported from. While energy demand in America has been gradually satisfied by America’s rapid development of shale gas, many oil-rich countries are actively approaching China. This April, the Iranian oil minister and the Saudi Arabian oil minister both visited China in hopes of signing long-term supply contracts. It would behoove China to diversify its oil sources.

    However, even though China has benefited from low oil prices, it is facing a dilemma.

    First, China is becoming increasingly dependent on the global market to meet oil demand, posting risks to energy security. Given that China’s domestic production has remained stagnant for years, the rate of oil import reliance (the import volume divided by the domestic production volume) will surpass 60 percent in late 2015 and rise to 75 percent in 2035, higher than the international warning line.

    Second, China’s increasing oil imports reflect how China may continue to rely on fossil energies to fuel the economy and will possibly fall behind in the new-energy competition. The next-generation energy rivalry will focus on non-fossil energies such as wind power and solar power. America has taken the lead in new energy and will export shale gas once the ban is lifted. China should also invest money in developing substitute energies and improving energy self-sufficiency.

    Third, soaring oil consumption in China will force the country to import more oil and in turn bring about more environmental problems. For years, oil consumption has not only put China at a disadvantage in global talks over carbon emission reduction, but it has heavily damaged China’s air quality. The most recent national air quality report categorized car exhaust as the main contributor to soaring readings of PM2.5 fine particulate matter. China needs to adopt more environmentally friendly technologies.

    The changes in the oil market are giving China an opportunity to consolidate its energy security, but they are also a wake-up call for the country to make its economic growth more sustainable.

    (The author is an editor with the News Desk at China Radio International.)