China Urged to Establish Oil Futures Market to Boost International Presence

China should establish an oil futures market of its own to gain pricing rights on the international oil market, instead of being a passive receiver of global oil prices. According to Gao Shixian, director of the Energy Economic and Development Research Center of the Energy Research Institute under the State Development and Reform Commission (NDRC), China's fluctuating oil market is not in its best interest, and it should take a more proactive role in stabilizing the international economy. As a leading oil consumer, China should shoulder its responsibilities as an economic giant.

Key Takeaways:

• China consumed 300 million tons of crude oil in 2005, accounting for 7.8% of the world's total consumption, second only to the United States.
• China imported 120 million tons of crude oil in 2005, ranking third in the world, with 47.2% coming from the Middle East, 30.3% from Africa, and the rest from Europe and the Asia-Pacific region.
• China has a predicted oil resources reserve ranking 10th in the world, but is far below the world's average level in terms of per capita possession.
• China's total energy consumption reached 2.225 billion tons of standard coal in 2005, accounting for 14% of the world's total.
• China's production of primary energy was worth 2.06 billion tons of standard coal in 2005, with coal output being 2.19 billion tons, crude oil being 181 million tons, and natural gas being 50 billion cubic meters.
• China has signed more than 70 oil/natural gas exploration contracts with over 20 countries and regions, with a direct investment of about US$10 billion and obtaining 20 million tons of crude oil equity and four billion cubic meters of natural gas equity.
• By 2010, it is expected that China will obtain over 50 million tons of equity oil overseas, which will be 28.6% of China's domestic crude output.

Statistics:

• China's oil consumption in 2005: 300 million tons
• China's oil imports in 2005: 120 million tons
• China's total energy consumption in 2005: 2.225 billion tons of standard coal
• China's production of primary energy in 2005: 2.06 billion tons of standard coal
• China's current oil reserves: 40.3%
• China's current natural gas reserves: 51.6%
• China's direct investment in oil/natural gas exploration contracts: about US$10 billion
• China's expected oil equity by 2010: over 50 million tons

Sources:

• Gao Shixian, director of the Energy Economic and Development Research Center of the Energy Research Institute under the State Development and Reform Commission (NDRC)
• Li Gansheng, vice director of the Science and Technology Committee of Sinopec
• Asia Pulse, "China Urged to Establish Oil Futures Market to Boost International Presence"
• (XIC) 21-04 1159