Get Oil and Gas Resources from Multiple Sources
                  By Shang Zhou
The oil capacity in China can only reach 152 - 165  million
t/a in 2000 and 160 - 200 million t/a in 2010. There is no
room for optimism. Oil import is an objective need in  the
economic development. Due to the shortage of  oil  supply,
  China  has  adopted  the  policy   of   restricting   oil
consumption for long years. It is  hard  to  make  a  true
estimation of the oil demand,  but  domestic  and  foreign
experts say that the oil demand in China  will  be  around
200 million tons in 2000 and 300 million tons in 2010. The
proportion of oil in the primary energy supply can only be
maintained at the present level of around 20%. It  is  far
lower than 30 - 40% in  advanced  countries  and  also  10
percentage points lower than the  world  average  of  30%.
Therefore the estimation of the oil demand in 2000 and 2010,
especially the oil demand after 2010,   is  probably  very
conservative.
The supply capacity of domestic oil is already close to the
highest level of oil production. China has  a  recoverable
oil reserve of 15.8  billion  tons,   of  which  nearly  3
billion tons has already been recovered, and the remaining
recoverable oil reserve is around  13  billion  tons.   In
theory, the maximum oil production capacity  in  China  is
therefore around 300 million t/a. With  the  consideration
of economic and technical possibility, the oil output  can
reach around 200 million tons in 2010. It will be close to
the maximum supply  capacity.   Therefore  there  is  only
  limited  potential  to  rely  on  domestic  resources  to
increase oil supply.
The world oil resources, on the contrary, are extremely rich.
Judging from the oil price trend in the world market,  the
oil price will be maintained at below 20 U.S. dollars  per
barrel for a  certain  period  of  time,   less  than  the
marginal cost in domestic oil production. It is  therefore
only logical to make some oil import, and there is also  a
guarantee in resources and supply capacity.
The historical experience gained  in  the  two  oil  crises
  proves  that  China  should  take   a   diversified   and
multilateral strategy in the oil import
(1) diversified strategy
A diversified strategy means the diversification of imports
. While importing crude oil, we should also import finished
oil products, liquefied petroleum gas,  liquefied  natural
gas, naphtha,  unconventional  oil  and  other  oil- based
products. Oil prices in the world market fluctuate  a  lot
and the fluctuation cycle and margin  are  different  with
different oil products.  Diversification  of  imports  can
reduce the impact of international  price  fluctuation  on
the domestic consumption price.
(2) multilateral strategy
A multilateral strategy means  the  multiple  oil  sources.
Major oil exporting areas at present  include  the  Middle
  East  and  the  Caribbean.   However,   these  areas  are
politically unstable. That  is  why  many  countries  have
adopted a multilateral strategy in the oil import. Besides
these areas, China can also import  oil  from  the  former
  USSR  including  Siberia  of  Russia  and  Turkmenistan,
Southeast Asian and North America.