Is There Any Alternative to Nuclear Power?

The Yomiuri Shimbun, Mar 27, 2011

The nuclear disaster at the Fukushima No. 1 power plant has shaken the foundation of Japan's energy policy.

No alternative source of energy to nuclear power generation appears to be on the horizon, and the power cuts that Tokyo Electric Power Co. is resorting to in the capital and other cities are likely to continue for sometime to come.

The power shortage is not only disrupting the daily lives of the people, it will probably seriously affect the entire economy as many businesses are struggling to cope with the situation.

The government must come up with plans to find the power needed to grease the wheels of the country.

It is now forced to choose between two courses of action: Restore public confidence in nuclear power generation or find alternative energy sources.

Japan depends on other countries for most of its fuel, such as oil and liquefied natural gas. Crude oil and LNG are used for thermal power generation.

However, Japan will be in a bind if countries exporting fuel to this country are destabilized politically.

To ensure energy security, this country has to increase, even gradually, its sources of energy without relying too much on other countries.

Before the earthquake and tsunami disaster, the government came up with a plan to double the ratio of energy sources by nuclear power stations and renewable energy, including solar power, from about 35 percent in fiscal 2007 to 70 percent in fiscal 2030.

The government placed its hopes on nuclear power as a "semi-domestic energy source" because of its efficiency and because the amount of fuel required is small.

However, the crisis at the Fukushima No. 1 plant, which stretches over the borders of Okumamachi and Futabamachi in Fukushima Prefecture, has forced the government to think twice about allowing construction of new nuclear power stations.

Already there are moves to suspend construction of nuclear power plants, such as Chugoku Electric Power Co.'s Kaminoseki plant in Kaminosekicho in Yamaguchi Prefecture and TEPCO's reactors at the Higashidori power plant in Higashidorimura in Aomori Prefecture.

The Higashidori plant is shared by [Sendai-based] Tohoku Electric Power Co. and TEPCO. Tohoku Electric has already started operating its No. 1 reactor and another is in the works, while TEPCO started construction of its No. 1 reactor in January and plans to build a second one.

Operations at TEPCO's Kashiwazaki-Kariwa nuclear power station in Kashiwazaki and Kariwamura in Niigata Prefecture stopped in 2007 following the Niigata Prefecture Chuetsu Offshore Earthquake.

The company has had great difficulty trying to win the understanding of local residents and governments toward fully restarting it. The plant is partially operating now.

As a stopgap measure, TEPCO plans to increase the operation rates of thermal power plants, but fuel costs for these power plants have increased sharply.

The political situations in Middle Eastern countries, which supply 90 percent of Japan's oil imports, are unstable and fuel imports therefore are unreliable.

Renewable energy sources, on which great expectations rest, still provide a relatively small amount of energy.

In addition, many technological problems must be solved before supplies can be increased in this field.

When Japan was adversely affected by two energy crises in the 1970s, the government and the private sector cooperated to make this country an "energy-saving society."

There is no other way to cope with the current situation than to conserve energy as much as possible.

However, a ranking Economy, Trade and Industry Ministry official issued a warning about summer shortages.

"Even if we engage in energy conservation, there'll be a shortage of electricity in the middle of summer. We need a plan to fundamentally solve the situation," the official said.

Economy, Trade and Industry Minister Banri Kaieda said Friday that his ministry would compile as early as the end of the month guidelines to restart operations at nuclear power stations after inspections are completed.

But will the government throw itself wholeheartedly behind the nuclear option? [Full story]

(Japan is the world's third biggest nuclear-electricity producer, after the United States and France--please see bar chart below, sorry for the blurriness. For information on Japan's nuclear crisis and its impact, please see my posts under the category/label "Japan." Clearer signals on incremental LNG demand are emerging from the two heaviest-hit Japanese power utilities: Together, Tokyo Electric Power Co. (Tepco) and Tohoku Electric will need roughly 485,000 tons per month of extra LNG to offset nuclear and thermal capacity lost as a result of the Mar. 11 earthquake and tsunami. Other Japaneses utilities may also need more LNG, as safety concerns have led them to delay restarting nuclear reactors closed for maintenance---please see: "Tepco, Tohoku Outline Summer LNG Needs," World Gas Intelligence, Mar 30, 2011, here. -- D.R.)
             [Click on bar chart to enlarge]

                                           Source: World Nuclear Association via The Economist, here

EU to Сheck Safety of All Its 143 Nuclear Reactors

Kyodo News, Brussels, Mar 15, 2011
The European Union agreed Tuesday to check the safety of all 143 nuclear reactors operating in its 14 member countries [please see my remarks below -- D.R.] in the wake of a nuclear crisis at the quake-hit Fukushima nuclear plant in northeastern Japan.

The European Union made the decision at an emergency meeting of energy ministers of its 27 member countries. Several reactors in the EU region have a structure similar to that of reactors at the Fukushima No. 1 [Daiichi] nuclear power plant, the European Commission said.

As serious accidents hit reactors in Japan, a country deemed to have some of the world's highest safety standards, the European Union is under pressure to review the safety of nuclear power generation, which it has billed as a source of safe and clean energy not emitting global warming gases.

EU Energy Commissioner Günther Oettinger said at a press conference that the nuclear safety checks will address all possible threats, including earthquakes, tsunami and terrorist attacks.

The European Union will also test the durability of a cooling system of those nuclear reactors in view of cooling system problems experienced at the Fukushima nuclear power plant. It will also check a backup power supply system taking lessons from Japan, where electricity shortage is becoming serious with the suspension of nuclear power plant operations.

The commission said Tuesday it is extremely unlikely that Europe will experience an earthquake similar in size to the one that hit northeastern Japan, apparently in an effort to allay fears over its nuclear reactors.

Also at the emergency meeting were officials from nuclear watchdog authorities and power companies from member countries. They will work out details for safety checks in cooperation with the European Union and member state governments. [Full story]

(Also, German Chancellor Angela Merkel said that seven reactors that went into operation before 1980 would be offline for three months while Europe's biggest economy reconsiders its plans to extend the life of its atomic power plants in the wake of events in Japan---please see my posts here and here. One of them, the 840MW Neckarwestheim I reactor, would remain shut down for good. A previous government decided a decade ago to shut all 17 German nuclear reactors by 2021, but Merkel's administration last year moved to extend their lives by an average 12 years. That decision was suspended for three months on Monday. Energy policies in the EU are still driven independently by member nations and vary hugely. For example, France gets about 75% of its energy from nuclear power, while Poland relies mostly on coal and solid fuels. France's 58 nuclear reactors make France the second-biggest user of nuclear power in the world after the United States, where 104 reactors deliver 20% of the country's electricity. In the EU 143 nuclear power plants are in use: Belgium (7), Bulgaria (2), Czech Republic (6), Finland (4), France (58), Germany (17), Hungary (4), Netherlands (1), Romania (2), Slovakia (4), Slovenia (1), Spain (8), Sweden (10), and UK (19). Before the Fukushima disaster, Italy and Poland planned to built nuclear power plants. Switzerland, which is not in the EU, on Monday suspended plans to replace and build new nuclear plants pending a review of the tsunami-stricken reactors in Japan. -- D.R.)

Eurogas: EU 27 Gas Consumption Rises 7.2% in 2010

by Doris Leblond, Paris, OGJ, Mar 9, 2011
Preliminary figures from Eurogas indicate that total gas consumption for the European Union 27 [...] increased by 7.2% to 522 billion cu m in 2010 vs. 2009. In 2009, the economic crisis had pulled down consumption to its lowest level since 2002.

The growth was due to a combination of severe weather conditions, which strongly pushed up demand from the residential sector, and economic recovery illustrated by the 1.8% real GDP growth and the 6.6% [sic] increase in the EU 27 average production index for 2010.

Higher electricity demand due to economic recovery combined with the switch to gas from other fuels for electric power generation, which significantly contributed to total demand growth.

Indigenous gas production fell by 4% to 176 bcm in 2010, mainly because of the decline in mature production basins. However, with a 34% share [of the total net supplies -- D.R], it is still the largest source of gas for the EU 27. Main external sources were Russia, 23%; Norway, 19%; Algeria, 10%; and Qatar, 6%; the latter two countries showed an increasing role as LNG suppliers to Europe.

The UK was the largest gas consumer in 2010 with 99.8 bcm. [Estonia] [...] was the smallest with [0.5] bcm ... of gas consumed. Other countries’ gas consumption numbers were, [in order]: Germany, 87 bcm; Italy, 81.1 bcm; France, 50.7 bcm; the Netherland, 46.8 bcm; Spain, 37 bcm; [Belgium, 19.9 bcm] and [Poland, 15.5 bcm] [...].

(Cyprus and Malta are the only two EU member states that do not consume natural gas. However, the US' Noble Energy plans to start work on an exploration well in block 12 offshore Cyprus at end-2011 in an attempt to prove the country's gas potential. Both Cyprus and Malta have been oil import-dependent countries. Among the Baltic States (in the narrower sense), Lithuania was the largest consumer of natural gas with 3 bcm in 2010, followed by Latvia, 1.7 bcm and Estonia, 0.5 bcm---please see Eurogas original report -- Natural Gas Consumption in the EU27 and Switzerland in 2010, Mar 7, 2011, here. For information on EU plans to import gas from Azerbaijan, please see my post here. -- D.R.)

IEA Facts in Brief: Libya

IEA website, Feb 21, 2011
A look at the supply of oil and gas from the North African nation.

Libya is a net exporter of oil, having sent abroad some 1.49 million barrels per day (mb/d) in January 2011. Europe receives more than 85 percent of Libya’s crude exports, while about 13 percent heads east of Suez. Libya also produces some 15 bcm/y of gas, a third of which is domestically consumed. Roughly 45% of domestic electricity is generated by natural gas. In 2010, Libya exported 1.2 mb/d of crude oil to IEA countries, of which 376,000 b/d or more than 30% went to Italy. France, Germany and Spain are also significant buyers.

Click here to see the Facts on Libya: oil and gas

(Libya's proven oil reserves of 46.4 billion barrels, the biggest in Africa, are the ninth largest in the world, as of Jan 1, 2011---please see my post "World's Top 22 Oil Reserves Holders, Jan 1, 2011," here. However, with its proven natural gas reserves of 54.68 trillion cubic feet (tcf), Libya ranks only 22nd---using OGJ data---among the world's largest proven gas reserves holders, as of Jan 1, 2011---please see my post "World's Top 22 Natural Gas Proven Reserve Holders, Jan 1, 2011," here. For information on Libya's oil and gas, please see also Economist Intelligence Unit---EIU---"Libya Economy: Oil Trouble," Feb 22, 2011, here. -- D.R.)

S Korea's 2010 Сrude Imports up 4.5% on Year to 872.4 mil Barrels

Platts, Seoul, Feb 15, 2011
South Korea's imports of crude oil in 2010 increased 4.5% from the previous year to 872.4 million barrels, or 2.39 million b/d, but its bills surged 35.4% to $68.7 billion due to higher international prices, the energy ministry said Tuesday.

The country paid $50.7 billion in 2009 to import 835.1 million barrels of crude.

South Korea also imported 276.8 million barrels of refined oil products last year, up 3.2% from 2009, and its bills jumped 40.8% to $20.9 billion, according to the Ministry of Knowledge Economy, responsible for energy, industry and commerce.

"The country paid a total of $89.6 billion to import crude and refined products last year, up 36.8% from $65.5 billion in 2009," the ministry said in a statement. "The country imported more crude oil to meet demand from refiners for local consumption and exports of oil products," it said.

South Korea bought 277 million barrels of crude, or 31.7%, of its total imports, from Saudi Arabia last year, and 106 million barrels, or 12.1%, from the United Arab Emirates. It also imported 103 million barrels, or 11.8%, from Kuwait, 73 million barrels, or 8.3%, from Iran, 64 million barrels, or 7.4%, from Qatar and 60 million, or 6.9%, from Iraq. Imports from Iran fell 10.8% from the previous year amid international sanctions.

South Korea exported 391.1 million barrels of oil products last year, up 3.9% from 376.4 million barrels in 2009, and earned $33.8 billion, up 32.8% [sic] from $25.5 billion in 2009.

The country exported $11.75 billion worth diesel last year, up 35.1% from 2009, $6.34 billion worth of jet fuel, up 31.4%, and $3.48 billion worth of gasoline, up 22.9%. A total of 77 million barrels, or 22.5% [sic] of its total exports, were shipped to China, followed by 41 million barrels, or 11.9%, each to Japan and Singapore.

The country produced 938.9 million barrels of oil products last year, up 2.9% from 912.6 million barrels in 2009, including 268.4 million barrels of diesel, 111.8 billion barrels of gasoline, and 122.5 million barrels of Bunker C oil.

The country's top refiner SK Innovation, formerly SK Energy, produced 339.5 million barrels of oil products last year, up 5.1% from 2009. The second-biggest refiner GS Caltex's production increased 6.6% to 270.9 million barrels. But production by S-Oil and Hyundai Oilbank fell 2.0% and 1.8% to 198.4 million barrels and 124.5 million barrels, respectively, due to maintenance.

The country domestically consumed 794.5 million barrels of oil products in 2010, up 2.1% from the previous year's 778.5 million barrels, according to the ministry.

It consumed 134.7 million barrels of diesel last year, up 1.8% from 2009, and 68.9 million barrels of gasoline, up 4.6%. Its consumption of kerosene rose 13.1% to 29.4 million barrels, while Bunker C consumption fell 5.9% to 62.1 million barrels due to more use of LNG in power generation, according to the ministry. [Full story]

(With no domestic oil reserves, South Korea must import all of its crude oil. South Korea is home to three of the ten largest crude oil refineries in the world -- SK Energy's Ulsan, GS Caltex's Yeosu and S-Oil's Onsan---please see list of largest oil refineries in the world, here. In 2009, South Korea ranked sixth among the world's Top 10 net oil importers behind the United States, China, Japan, Germany and India---please see EIA graphic, here. Also, although South Korea is not among the group of top gas-consuming nations, it is the world's second largest importer of LNG after Japan. For South Korea's LNG imports in 2010, please see here. -- D.R.)

Rosneft and BP Form Global and Arctic Strategic Alliance

BP website, Jan 14, 2011
BP and Rosneft announced today [Jan 14] that they have agreed a groundbreaking strategic global alliance.

Rosneft and BP have agreed to explore and develop three license blocks - EPNZ 1,2,3 – on the Russian Arctic continental shelf. [See map below -- D.R.] These licences were awarded to Rosneft in 2010 and cover approximately 125,000 square kilometres in a highly prospective area of the South Kara Sea. This is an area roughly equivalent in size and prospectivity to the UK North Sea.

                  Map: Location and Scale of South Kara Sea Licences

                                                                          Source: BP

This historic agreement creates the first major equity-linked partnership between a national and international oil company. Following completion of this agreement, Rosneft will hold 5 per cent of BP’s ordinary voting shares in exchange for approximately 9.5 per cent of Rosneft’s shares. The share swap component of the alliance creates strategic alignment to pursue joint [oil and gas] projects and demonstrates mutual confidence in the growth potential of both companies.

BP and Rosneft have also agreed to establish an Arctic technology centre in Russia which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf. The technology centre will build on BP’s deep offshore experience and learnings with full emphasis on safety, environmental integrity and emergency spill response capability.

Rosneft and BP have agreed to continue their joint technical studies in the Russian Arctic to assess hydrocarbon prospectivity in areas beyond the Kara Sea. The parties will also seek additional opportunities for international collaboration beyond their 50/50 joint venture partnership in Ruhr Oel GmbH, a refining joint venture in Germany (subject to completion of Rosneft’s recent purchase of 50 per cent of Ruhr Oel from PDVSA).

Igor Sechin, Deputy Prime Minister of the Russian Federation, who participated in the signing ceremony, said: “Global capital and Russian companies are clearly ready to invest in world class projects in Russia; and Russian companies are quickly emerging at the forefront of the global energy industry.”

BP’s chief executive, Bob Dudley, said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation. We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins. Underpinning this alliance is a new type of relationship based on a significant cross-shareholding, and bringing together technology, exploration and safe and responsible field development skills. We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group.”

Rosneft’s President, Eduard Khudainatov, said: “I am pleased that in just a few months we’ve significantly moved forward in implementing Russia’s offshore strategy. In its operations, our future joint venture will utilize the experience and expertise of BP, one of the leaders in the global oil and gas industry. This project is unique in its complexity and scale both for Russia and the global oil and gas industry. We see it as the next step in developing our relations with BP.”

BP Chairman, Carl-Henric Svanberg, said: “The world’s need for energy continues to increase. BP is working with national oil companies using its leading exploration skills and expertise to meet this demand. This is a trend which will increase as access to resource becomes scarcer.

This landmark deal creates a deep partnership which represents a new stage in these relationships. The exchange of shares demonstrates our mutual commitment. The BP board believes that the combination of assets and skills will unlock significant value and thus the issue of shares to Rosneft is in the interests of all shareholders.”

The aggregate value of the shares in BP to be issued to Rosneft is approximately $7.8bn (as at close of trading in London on 14 January 2011). The transaction is subject to certain listing approvals and the completion of certain administrative requirements and is expected to complete within a few weeks. BP and Rosneft view their cross-shareholdings as long term and strategic.

Rosneft is Russia’s leading oil producing company. Read More

(BP already has a 1.3% stake in Rosneft and as a result of the announced transaction, BP's stake in Rosneft will increase to 10.8% -- i.e. 9.5% + 1.3%. Also, Russia accounts for around one quarter of the British energy giant's total production -- before the U.S. oil spill. In 1998, BP and Rosneft started an alliance that eventually led to the formation of three joint ventures to conduct exploration on the Russian continental shelf, offshore Sakhalin. BP also owns 50% of Russia's third biggest oil producer, TNK-BP -- see my blog post here. Rosneft's major shareholder (75.16% of shares) is the company Rosneftegaz, 100% state-owned. For the Rosneft's profile, see Platts Top 250 Global Energy Company Rankings -- No. 14, in my blog here. Rosneft has proved reserves of approximately 18.1 billion barrels of oil and 816 billion cubic meters of gas. As of year-end 2009, Rosneft’s total proved oil and gas reserves under PRMS classification were 22.9 billion barrels of oil equivalent, among the highest for a publicly traded petroleum company worldwide, according to Rosneft's website. Also -- according to Platts data, the company operates 1,690 filling stations in 39 regions of the Russia Federation and 7 refineries. It has operations primarily in Western Siberia, Southern and Central Russia, Timan-Pechora, Eastern Siberia, and the Far East, as well as in Kazakhstan and Algeria. -- D.R.)  

                  

Deutsche Bank Forecast Sees Slower Transportation Electrification and Greater Gasoline Demand Near-Term; Increased Confidence in the Pace and Breadth of Long-Term Shift to Efficient Transportation Systems

by Green Car Congress, Jan 1, 2011
In a December 2010 research note on the 2011 outlook for the oil market, Deutsche Bank (DB) analysts have revised their earlier expectations of the pace of near-term transportation electrification trends (slower) and gasoline demand (greater) but note that the developments in the global transportation sector in 2010 have increased their confidence “in the pace and breadth of the long-term shift to a more efficient transportation system.”

Their analysis is in the context of the “surprising [oil] demand strength of 2010“; 2010 saw absolute incremental demand at around 2.2mb/d of growth—the second highest in 30 years, despite oil prices in the $90/bbl region. Key developments in the transportation sector that they note include:

Positive for gasoline demand:

• Strong Chinese car growth in 2010, particularly in the first half of the year, with vehicle sales up 30% year-on-year (YoY) through the first eleven months of 2010. In DB’s Fall 2009 note, they had forecast 12% growth. By mid-2Q, the team had increased its estimate to 25%.
  Deutsche Bank’s China Auto analyst, Vincent Ha, continues to see robust light vehicle sales over the next few years, with a slow to about 11% YoY growth in 2011 (due to a high base from the 2010 surge, and reductions in government stimulus), followed by sustainable low double digit growth in 2012. He also believes that sub-1.6L passenger cars will outgrow larger vehicles due to favorable policies.
• Slower than expected sales of hybrids everywhere in the world but Japan in 2010. In the US hybrids fell from about 3% of total sales in 2008-09 to 2.2% in 2010. The DB team attributed the reduction to less concern about gasoline prices, and therefore fuel efficiency, as well as fewer government subsidies for hybrids.
  

  As we’ve said before, it may take another $140/bbl+ oil price surge to truly and finally change US transportation behavior and policy.

• Increasing political animus towards the ethanol tax credit, which was “begrudgingly renewed for one year in the lame-duck tax bill.” The team suggests that this may be the last extension for the credit. ...

Negative for global gasoline demand ... :

• Rapidly falling lithium-ion battery prices, and steepening expected cost reduction curves for both batteries and electric drive components.

Based on discussions with industry experts and several automakers, the DB Auto team has lowered its advanced lithium ion battery cost projection by about 30% for 2012. Current prices have fallen from $650/kWh+ in 2009 to about $450/kWh now, and DB’s forecast is the price to fall at about a 7.5% CAGR from 2012 through 2020 to about $250/kWh.

The consumer economics of a pure electric start to work without subsidy by about 2020 under this battery price decline scenario. The industry rule of thumb suggests that consumers will consider a 3-4 year payback to be an economic choice. With no subsidy, 2012 electric vehicle models will have a 10+ year payback vs. a typical combustion analog, assuming $3.25/gallon gasoline. With a $7,500/vehicle subsidy in 2012, an electric will have about a 5 year payback. Around 2015, assuming a $4,500/vehicle subsidy, the payback period starts to fall into a range at which consumers will view the economics favorably. By 2020, the economics should be able to more or less stand on their own with subsidy, and a small subsidy would clearly nudge the payback below 3 years. 

• Strong indications of commitment by the Chinese government to support the rapid development of both domestic demand for electric vehicles and a competitive domestic electric vehicle industry.
• New US fuel efficiency/emissions standards which will not be achievable without significant penetration of electric vehicles, according to the DB analysis.
• Fuel standards in Europe, Japan and Canada that will require widespread adoption of electrics. There is pressure to make European standards even more aggressive.
• More governmental consumer incentives (rebates or tax credits) to encourage the purchase of new electrics and plug-in electrics.
• An explosion of hybrid sales in Japan. The Toyota Prius became the biggest selling car in Japan in 2009, and has remained in that position throughout 2010. Several other hybrid models also made the leaderboard. Hybrids went from about 8% of sales in 2009 to over 11% in 2010. Honda believes that hybrids will account for 23% of the market by the end of 2011.
• Strong pre-sales of electrics in the US by commercial enterprises. In November General Electric put in a pre-order for 12,000 GM electric cars, and said it planned to buy 25,000 EVs from all manufacturers by 2015 for its corporate fleet. At the consumer level, dealers have put in more 2011 orders than can be produced for both GM’s Chevrolet Volt and Nissan’s Leaf. Volt manufacturing capacity will rise from 10K in 2011 to about 65K in 2012. Nissan is building a 150K capacity plant in Tennessee for the Leaf which will come on line in 2012.
• New business models, combined with government incentives and subsidies, that dramatically lower the entry price for consumers.
• A growing number of xEV options around the world. The DB auto team counts at least 130 models in the global pipeline for 2012.
• Aggressive near-term OEM lease pricing.
• Increasingly micro-hybridization, with a majority of ICE’s being micro-hybrids (e.g., equipped with start-stop and/or some regen functionality) by 2020.

Read Full

What is Beijing Willing to Do to Secure Oil and Gas Supplies?

by Michael Richardson, The Japan Times online, December 27, 2010
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.

Platts Top 250 Global Energy Company Rankings 2010

Platts, November 2, 2010
2010 marks the ninth year Platts has produced the Top 250 Energy Companies list. The report measures financial performance by examining each company’s assets, revenue, profits and return on invested capital. The Rankings call attention to the continued leadership of the international oil companies, the rapid advance of the BRICs (Brazil, Russia, India, China) and the resurgence of the global power sector. Here are some of the highlights [my order of selected issues, D.R.] of the Platts report:

• Top Ten - Reigning supreme at the top of the rankings for the sixth consecutive year is US major ExxonMobil. ... While ExxonMobil’s European gas production declined, the coming on stream of its giant LNG production facilities in Qatar have helped it retain a strong grip on European markets. Second in the running is the now troubled UK major BP, which improved its position from fourth in the rankings in 2008. ... Chevron Corporation and Royal Dutch Shell plc each saw their profits decline more than 50 percent which resulted in a drop in the rankings to ninth and tenth place from second and third, respectively. France's Total SA remained at fifth place. While the top ten rankings remain the preserve of the integrated oil and gas (IOG) companies, one intruder is evident: German electric utility E.ON AG moved from 45th in last year’s rankings to 6th this year, the only non-IOG company in the top ten, although it is a sizeable gas producer. ... 

• Asia on the Ascendant - It is clear that Asia as a whole has substantially improved its position in the global energy firmament over the course of 2009. Of the top ten Asian companies regionally, nine improved their global ranking; of the top 20, 15 improved their global position; while if new entrants are included, out of the top 50 Asian companies, as many as 40 of the top 50 gained a higher global ranking this year to the detriment of other regions. There are now 68 Asian companies in the Platts top 250, compared with 55 last year. The Asian top ten remains dominated by Chinese and Indian companies. PetroChina Co Ltd retains the top spot, while the China Petroleum & Chemical Corp comes in second, ousting CNOOC Ltd, which falls to sixth place. India’s Reliance Industries Ltd moved from fourth to third, while India’s Oil and Natural Gas Corp Ltd [ONGC] rises from fifth to fourth. ... ONGC has been ranked 18th in the top 250 rankings. This ranking of ONGC has taken it to eight steps higher as against its 26th rank in the same list last year in 2009. This is the highest ever ranking of ONGC in the list of Platts Top 250 Global Energy Companies, ahead of global leaders like Conoco Phillips, Statoil, CNOOC, BG and others. ...  

• BRICs to the Fore - Within the global top 20, eleven companies are from the BRICs -- Brazil, Russia, India and China -- compared with just six the year before. Moreover, while BRICs still account for four of the top ten, all are rising; Russia’s Gazprom jumped to third place from eighth the year before and was also ranked as the world’s most profitable listed energy company. Brazil’s Petrobras claimed fourth place from sixth in the previous year’s global ranking. [My emphasis -- D.R., and please read below 2009 rankings]. PetroChina rose to seventh from ninth place and the China Petroleum and Chemical Corp jumped from 23rd place to eighth in the global rankings this year. [Read full report] 

(Platts 2010 rankings recognize the 2009 financial performance of publicly-held energy companies. For Platts 2009 rankings, which are based on financial reports from 2008, please see Platts Insight, November 2009, pp. 50-54---2009 Platts Top 250 Global Energy Companies or, alternatively, here -- D.R.)