A. IMPORT DEPENDENCE AND ENERGY SECURITY

In the United States, concerns over energy security and import dependence are linked most closely to petroleum issues. The United States currently imports about half of its petroleum, and petroleum imports will rise to 65 percent by 2020. The Organization of Oil Producing Exporting Countries’ share of those imports will rise to about 50 percent in 2020. By 2020 the Persian Gulf region will produce about half the world’s oil, but imports from all regions are subject to concerns in varying degrees over transport and geopolitical implications.20 China likely will import about 40 percent of its oil and about a quarter of its natural gas by 2020. Although concerns over increasing imports are a key driver of China’s energy policy, energy security also means increased variety of fuel sources, especially diversification from China’s heavy dependence on coal (see sections on “Coal” in Chapter 1 and the following section in this chapter).

China’s petroleum industry is facing unprecedented difficulties in meeting the surging domestic demand. Aging onshore oil fields, below-expectation offshore production, and slow development of new oil fields in the remote western region all contributed to only modest growth of crude oil production over the past 15 years. China has been a net oil importer since 1993, and net imports were about 1 EJ (over 20 million tons) in 1996, most of them oil products. China imported about half its crude oil from the Gulf region in 1997 and, as imports increase, so likely will the share from the Gulf region. China will need to make significant investments in the refining sector to accommodate this increasing share of high-sulfur crudes from the Gulf region.

Chinese experts estimate that domestic crude oil production could peak at around 9 EJ (200 million tons) in 2020. The gap between demand and domestic supply likely will be 6 EJ (130 million tons).

With natural gas expected to represent 10 percent of primary energy supply in 2020, China will use about 200 billion cubic meters (8 EJ), more than half of which likely will be imported. Liquefied petroleum gas (LPG) also is increasing; between 1994 and 1996, imports increased more than threefold, from less than 1 million tons in 1994 to almost 3.5 million tons in 1996.

It is clear why the Chinese government has elevated energy security initiatives to a higher level of priority. Maintaining a strong domestic oil industry is considered by the government to be a partial safeguard against the unpredictable international market; achieving this goal without enduring too great a burden on the economy is a great challenge.

These considerations add emphasis to the importance of alternative transportation options. Options should include mass transit systems, more efficient vehicles, and alternative-fuel and low-emission vehicles. Infrastructure planning should be also considered in this context.

20  

Oil represents about 40 percent of total world energy supply and about 90 percent of energy traded between countries.



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