Oil and Gas Emergency Policy: China 2012 update

The People's Republic of China is one of the most important oil- and natural gas-producing counties in the world. Although coal is the dominant energy source in China, accounting for some 70% of the country’s total energy consumption (TEC) in 2009, oil and gas are also essential energy sources. Despite strong growth in consumption of oil, its share of TEC fell in 2009, as coal use rose even faster to meet burgeoning demand for electricity. Although China is now the world’s fifth-largest oil producer, the country has been a net oil importer since 1993. More than 50% of the total crude oil imports came from counties of the Middle East. To prevent a potential shock to the economy caused by an oil supply disruption, the Chinese government has been steadily pushing to build an oil stock reserve system. China has completed four stockpiling facilities. Regarding natural gas, a strong policy push has boosted natural gas supplies, particularly to residential customers, so that its share doubled in 2009; in 2010, domestic supplies met 90% of domestic consumption. The key elements of China’s approach to gas security are to further promote domestic production from conventional and unconventional resources, to expand reserves, to construct gas storage facilities, and to accelerate construction of liquefied natural gas terminals and interregional gas pipelines in order to strengthen supply of gas imports. Although China does not have government gas stocks or mandatory industry stocks, the government promotes the expansion of commercial inventories.