China's dependence on increasing amounts of oil imported from potentially unstable areas of the Middle East and Africa through vulnerable shipping channels has become an uncomfortable fact of life for the government in Beijing.
Chinese policymakers have called it their "Malacca dilemma," a reference to fears that the Straits of Malacca and Singapore in Southeast Asia, the channel used by most ships steaming between East Asia and the Middle East-Africa region, could be disrupted or even closed in a crisis.
Countries flanking the straits, chiefly Indonesia, Malaysia and Singapore, have sought to reassure China that this key artery for international shipping is secure.
Indeed, the bigger risk to oil supplies today is the possibility that a confrontation between the West and Iran could threaten the flow of oil from the Persian Gulf through the narrow Hormuz Strait, the only way into and out of the gulf by sea. China gets about half its imported oil from this energy-rich but volatile zone.
From being a net oil exporter in the early 1990s, China now imports just over half the oil it uses. Last year, it surpassed Japan to become the world's second-largest oil importer after the United States. The U.S. Defense Department reckons that China will import almost two-thirds of its oil by 2015 and four-fifths by 2030.
As if that was not set to create a perfect storm of energy supply worries, China in 2007 became a net importer of natural gas as well, after almost two decades of self-sufficiency.
While oil meets nearly 20 percent of China's total energy consumption, gas accounts for just 3 percent. But this is rapidly changing, as the government tries to move electricity generators, heavy industry, and home-heating and cooking away from polluting coal to gas, the cleanest of the fossil fuels.
China's gas consumption has tripled in the past decade and is expected to make a similar leap over the next 10 years, driven by growing industrial production and expanding urbanization in the world's second-biggest economy. By 2020, gas is projected to have a 10 percent share of energy use.
Where will all this extra oil and gas come from and how will China seek to secure its foreign energy sources and supply lines? More
(According to the U.S. Energy Information Administration's--EIA--China Country Analysis Brief, November 2010, here: " China consumed an estimated 8.3 million barrels per day (bbl/d) of oil in 2009, up nearly 500 million bbl/d from year earlier levels. During that same year, China produced an estimated 4.0 million bbl/d of total oil liquids, of which 96 percent was crude oil. China’s net oil imports reached about 4.3 million bbl/d in 2009, making it the second-largest net oil importer in the world behind the United States and for the first time surpassing Japan’s imports. " - See EIA graphic below, sorry for the blurriness, D.R.)
Notes: EIA graphic accessed via China Country Analysis Brief, Nov 2010. Top 10 includes UK (not indicated). Also, Dutch net oil imports were larger than Taiwan's imports. -- D.R.