China signs $50 billion U.S. dollars in oil projects this month

China Approves $9 Billion Sinopec-Kuwaiti Refinery JV



"China Approves Kuwaiti Refinery
By SIMON HALL
MARCH 8, 2011, 2:48 A.M. ET

BEIJING—China has given final approval to Kuwait to build an oil refinery in the south of the country in a joint venture with China Petroleum & Chemical Corp., a person with firsthand knowledge of the decision said Tuesday.

China, dependent on oil imports, has been making deals with major producers to process more crude domestically.

The $9 billion project between Kuwait Petroleum Corp. and Asia's largest refiner by capacity, also known as Sinopec, has been under negotiation for more than five years. It includes a refinery with a capacity of 300,000 barrels a day in the city of Zhanjiang in Guangdong province and an ethylene plant with a capacity of a million tons a year, along with related utilities, jetties and oil pipelines, according to previous comments from government and company officials involved in the talks.


A Beijing refinery belonging to Sinopec, Asia's largest refiner by capacity and partner with Kuwait Petroleum in a planned Guangdong project (Photo credit: Nelson Ching/Bloomberg News)

"The National Development and Reform Commission has given its approval. It is the final approval needed," the person said, without elaborating. "We will do the front-end engineering and design and then move ahead with the construction."

This is China's second refinery project with a major crude-oil producer in the past six months—in September 2010 Russian oil company OAO Rosneft agreed to build a 260,000-barrel-a-day refinery in Northern China in a joint venture with China National Petroleum Corp.

A plan by CNPC and Venezuela's state-run Petróleos de Venezuela SA to build a refinery in Guangdong to process that country's oil is awaiting a formal go-ahead.

A year ago, Saudi Basic Industries Corp., or Sabic, started commercial production at a petrochemical complex in Tianjin, China, a joint venture with Sinopec.

Kuwait is due to supply the crude oil for the Zhanjiang facility, in which Kuwait Petroleum Corp. and Sinopec will each hold a 50% stake.

Given the importance of the project, the decision was referred to China's State Council, the country's cabinet, about two weeks ago, the person said.

It isn't clear whether Kuwait has obtained approval to sell some of the refinery's output in the Chinese market through a network of Q8-branded filling stations it has said it wants to open in China. It is also unclear whether other foreign companies will join the project. KPC has previously said it planned to sell some of its 50% stake to international partners.

Officials from Sinopec and the NDRC weren't immediately available for comment.

The project, which Kuwaiti officials have said could be operational in 2013, will push Kuwait higher up the list of China's oil suppliers. In 2010 it was ninth, providing an average of 197,000 barrels a day of crude out of total Chinese imports of 4.8 million barrels a day. China relies on imports for around 55% of its oil needs.

Write to Simon Hall at [email protected]"

Sinopec to Invest in Saudi Refinery


Chinese President Hu Jintao and Saudi King Abdullah bin Abdul-Aziz
(Trade between China and Saudi Arabia is booming.)



"After the magnitude-8.0 earthquake hit western China and claimed nearly 90,000 lives in May 2008, King Abdullah became the biggest donor to China, offering a cash donation of 50 million U.S. dollars and materials worth 10 million U.S. dollars.

Saudi Arabia is now China's largest trading partner in West Asia and Africa. In 2008, two-way trade between China and Saudi Arabia amounted to 41.8 billion U.S. dollars."



"Sinopec to Invest in Saudi Refinery
By DAVID WINNING And JING YANG
MARCH 17, 2011, 9:22 A.M. ET

SHANGHAI—China Petrochemical Corp. struck a deal late Wednesday to invest in a Saudi Arabian refinery, in a move likely to strengthen China's overseas energy ties but that also carries risks amid rising volatility in the Middle East.

Sinopec will take a 37.5% stake in the Red Sea Refining Company joint venture that will build the Yanbu refinery once its agreement with Saudi Arabian Oil Co., known as Saudi Aramco, becomes binding.

Aramco will hold the remaining interest, the companies said. The deal marks the first move by Sinopec—Asia's largest refiner by capacity—to become a global player in oil processing after focusing its overseas expansion up to now in acquiring stakes in producing crude oil and natural-gas fields.

"It will advance Sinopec's overseas operations, enhance its strategic planning of refining, and further guarantee China's energy supply security," Su Shulin, the company's general manager, said.

Despite China's efforts to diversify its energy sources, much of the imported crude it needs to fuel growth comes from Saudi Arabia, according to the U.S. Energy Information Administration. Chinese officials say they want to boost trade with Saudi Arabia by about 50% to $60 billion by 2015, further increasing Beijing's dependence on the kingdom.

The risk for Sinopec, a state-run entity, lies largely in economic implications of possible disruptions to energy supplies coming through the Persian Gulf, and Beijing's unease that the calls for democratic change sweeping across the Middle East and North Africa will set an unwelcome precedent at home.

Sinopec is playing catch-up with domestic peer PetroChina Co., which has plowed billions of dollars into building up a refining and distribution network that includes hubs in North America, the Caribbean and Europe.

In a major deal in January, PetroChina offered around $1 billion to British petrochemicals firm Ineos Group Holdings PLC for shares in two proposed joint ventures that would conduct crude-oil refining and trading at Scotland's Grangemouth refinery and France's Lavera refinery.

But given the regional turmoil in the Middle East and North Africa, Sinopec's move appears to be much riskier than the PetroChina-Ineos deal.

Saudi troops have been deployed in Bahrain, creating a potential flashpoint in a state that is strategically important to another regional rival—Iran.

Analysts say the escalating tensions in the region call into question the logic of any new energy investment there.

"The present crisis may well worsen, perhaps even to the dimensions of 1973-1974, when contradictions of the Saudi-American relationship reached a breaking point as officials in Washington openly threatened the possibility of seizing Gulf oil fields or even beyond…" says Helima Croft, an analyst at Barclays Capital.

But Sinopec's deal is potentially extremely lucrative, as it enables the Chinese company to forge closer ties with Saudi Aramco, which controls the world's biggest oil reserves. Up to now, the business relationship has centered on crude trading and Aramco's investment in a Sinopec-run, 240,000-barrel-a-day refinery in China's Fujian province.

Saudi Arabia is China's biggest supplier of crude oil, shipping nearly 900,000 barrels a day last year, according to data from China's General Administration of Customs. Although neither Aramco nor Sinopec have disclosed the cost of the Yanbu plant on the Red Sea coast, it will run into billions of dollars.

U.S. oil major ConocoPhillips last year pulled out of the Yanbu project as it decided to cut back on refining and marketing activities.

The Yanbu refinery will process 400,000 barrels a day of Arabian Heavy crude oil, and is expected to begin operations in 2014. The refinery will produce 90,000 barrels a day of gasoline, 263,000 barrels a day of ultra-low sulfur diesel, 6,300 metric tons a day of petroleum coke and 1,200 tons a day of sulfur, and will supply these products to both the international and domestic markets.

—Andrew Critchlow contributed to this article.

Write to David Winning at [email protected]"

China’s Shale Gas 12 Times Conventional Gas Reserves, EIA Says

At China's natural gas consumption rate in 2009, the U.S. Energy Department implicitly estimates that China has a 414-year supply (e.g. 1,275 trillion cubic feet shale gas reserves / 3.08 trillion cubic feet annual consumption = 414 years) of domestic natural gas from shale formations.

You should note on the map, colored in yellow, that the U.S. Energy Department did not provide an estimate for four large shale gas basins in China. Also, the EIA study excluded "offshore resources" for shale formations. Since the estimate for China is based on only two out of six shale gas basins and excluded offshore resources, it is clear that China's true “technically recoverable” shale gas reserves are significantly higher than 1,275 trillion cubic feet.


Figure 1. Map of 48 major shale gas basins in 32 countries


Shale gas, which is locked in organic-rich sedimentary rocks, is found below the surface between two rock formations where shale acts as source for the natural gas.



"China’s Shale Gas 12 Times Conventional Gas Reserves, EIA Says
April 06, 2011, 4:19 AM EDT
By Dinakar Sethuraman

April 6 (Bloomberg) -- Deposits of natural gas from shale formations in China are 12 times higher than conventional gas reserves in the nation, according to the U.S. Energy Department.

Reserves from China’s shale rocks that are “technically recoverable” were at 1,275 trillion cubic feet compared with 107 trillion in proved gas deposits in 2009, the department’s Energy Information Administration said in a report yesterday. India has 63 million cubic feet in shale deposits compared with 37.9 trillion in conventional gas.

China produced 2.93 trillion cubic feet of dry gas, stripped of liquids, in 2009 and consumed 3.08 trillion. India’s output was 1.43 trillion and demand was 1.87 trillion, according to the report.

The world may have 6,622 trillion cubic feet of shale gas reserves, comprising 862 trillion in the U.S. and 5,760 trillion in 48 shale basins across 32 countries, the EIA said in its assessment.

China completed its first horizontal shale gas well after 11 months of drilling, according to China National Petroleum Corp.’s online newsletter on March 31. CNPC is working with Royal Dutch Shell Plc to explore Sichuan’s Fushun-Yongchuan shale-gas block and with Chevron Corp. on the Chuandongbei project as the country plans to triple the use of natural gas to about 10 percent of energy consumption by 2020.

--Editors: Jane, Ching Shen Lee, Paul Gordon

To contact the reporter on this story: Dinakar Sethuraman in Singapore at [email protected]

To contact the editor responsible for this story: Jane, Ching Shen Lee at [email protected]"

China's pollution is probably bigger of a problem than its underpowered military presence in the Asia-Pacifics. Millions' life are endangered because of the pollution. They should switch to cleaner engery instead of keep burning biofuels.

China has 1,000-year supply of domestic coal

Wikipedia claims that "at current levels of production, China has 48 years worth of [coal] reserves." However, Wikipedia is following an extremely restrictive and technical definition of coal reserve. If a massive supply of coal is available and no water supply is nearby then technically, the massive supply of coal is considered irrecoverable. Obviously, it is silly to follow this definition.

The common-sense majority will count all of China's coal reserves and recognize that water, which is crucial in mining and washing coal, can be transported through technological means to the mining site.

Using the broader definition of coal reserve (irrespective of the absence of nearby water), China has 1.4 trillion metric tons of coal at Xilinhot (e.g. 425-year supply). "Chinese geologists say even larger coal reserves exist" in Xinjiang. Tallying up the known supplies of Chinese coal, we have a current supply of 48 years, 425-year supply at Xilinhot, and 425-year+ in Xinjiang. Altogether, the known supplies of Chinese coal exceed 898 years, which is approximately an 1,000-year supply of domestic coal.


China's proposed Bohai Sea pipeline


Inside the control room of the [Inner Mongolia] Ordos mine, operated by Shenhua Group. (Photo © Toby Smith, Reportage by Getty Images)


Train lines haul coal across the grasslands of Inner Mongolia, which produced 782 metric tons of coal in 2010, ahead of the 741 million metric tons produced in neighboring Shanxi Province. (Photo © J. Carl Ganter / Circle of Blue)



"Water Pipeline Could Open China's Northern Coal Fields
By Keith Schneider
Wed Apr 6, 2011 2:32am EDT

Sixty-year-old geographer Huo Youguang, a professor in the Center for Environment and Modern Agriculture Engineering at Xi'an Jiaotong University in Xhanxi Province, thinks he has a solution for China's geographic mismatch: drop a pipe into the Bohai Sea, draw more than 340,000 cubic meters (90 million gallons) of seawater a day into a complex of coastal desalination plants, and then pump it 1,400 meters uphill for more than 600 kilometers (nearly 400 miles) to Xilinhot, where it will be used for coal mining operations.

The Inner Mongolia city of 177,000 lies atop a mammoth coal reserve limited only by the lack of water needed to mine it. Chinese authorities estimate Xilinhot's proven and unproven coal reserves to contain 1.4 trillion metric tons. At China's current rate of coal consumption - more than 3 billion metric tons annually - the Xilinhot reserves alone could power the country for the next 425 years.

If the first $US 6 billion stretch of the Bohai Pipeline were to perform as Huo anticipates, it could be expanded and sent an additional 2,800 kilometers (1,850 miles) from Xilinhot - crossing the rest of Inner Mongolia and through northern Gansu Province - all the way to the western province of Xinjiang, where Chinese geologists say even larger coal reserves exist. Leaders are pressing the province to double current coal production capacity to 200 million metric tons of coal per year by 2015.

Collision Approaches

"We need water, and the sea can provide it," Huo told Circle of Blue in December, noting he had first proposed an across-the-north route for a pipeline from the Bohai Sea back in 1997.

Of all the threats over the next decade to China's rapid modernization, arguably none is more significant than assuring adequate supplies of coal, which accounts for 70 percent of the nation's total energy production and consumption. From 1995 to 2010, China's GDP grew almost eight-fold and industrial water use increased by close to 50 percent.

As China rushes deeper into the second decade of the 21st century, the nation's energy production and consumption trend is a steep, increasing line. It is that vector - the fast-rising energy demand of the water-energy confrontation - that is proving so difficult to resolve.

China's fast-growing regions contain the nation's largest proven and unproven coal reserves. But developing coal reserves, along with the power and processing infrastructure to consume coal, uses tens of billions of gallons of water each year - water that isn't available in a region that receives just a few inches of rain annually and where climate change is reducing snow pack.

Reprinted with permission from CSRwire"

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"China's coal reserves 'will make it new Middle East', says energy chief
by Leo Hickman
Tuesday 8 March 2011 11.39 GMT

Fred Palmer, World Coal Association boss, also says China technologically is ahead of US, and fossil fuels are here to stay.


A Heidaigou open cast coal mine in China's Xinjiang province. (Photograph: Corbis)

Vast reserves of coal in the far west of China mean it is set to become the "new Middle East", a leading figure in the global coal industry has claimed. Fred Palmer, the chairman of the London-based World Coal Association and a key executive at Peabody Energy, the world's largest privately owned coal company, also said that China is leading the US in efforts to develop technology to "clean" coal of its carbon emissions by burying them underground.

In a wide-ranging interview with the Guardian, Palmer dismissed the idea that the world might ever experience "peak coal" – the point at which maximum global coal production rate is reached. "The Dakotas, Mississippi, Alabama, Louisiana, Texas all have large, large amounts of lignite [brown coal]," he said. "Or in western China and Mongolia you have lower-ranked coals. So I don't think there's a peak coal problem. I think Xinjiang province in the west of China, where they say there's a trillion tonnes of resources, will be the new Middle East. Anyone who has the notion that we're going to move away from fossil fuels just isn't paying attention."

China is "ahead of the US" when it comes to developing 'low-carbon coal' technology, said Palmer, and "we should be doing what they are doing". This weekend, the Chinese government announced a new five-year plan, which included a pledge to reduce emissions growth relative to GDP by 17 per cent. Palmer added that the world should "applaud" China for consuming so much coal "because it makes the world better for everyone for no other reason that it takes huge price pressures off of oil". China processes a significant amount of its coal to produce liquid fuels which can be used as an oil replacement.

Earlier this month, Peabody Energy confirmed it intends to build a vast new port in Washington state by 2015, to ship coal mined in Wyoming across to China. The plans have been strongly criticised by environmental groups in the US. Greg Boyce, Peabody's chief executive, had said the port would export 24 million tonnes a year, but Palmer revealed to the Guardian that this "could reach up to 50 million a year".

Palmer also dismissed the notion that such exports would only act to exacerbate global carbon emissions: "I want to be absolutely clear that [Peabody is] in the 'low-carbon coal' camp and we need to drive that. China could easily tell the world that they're not going to do anything on climate. But they are not doing that. They are a major coal user. They know the concern is there and they are embracing the technology for 'low-carbon coal' and they want to deploy it. And that's where we are, too."

Last week, the FutureGen Alliance, a $1.3bn carbon capture and storage project in Illinois, revealed where facility will be located. Palmer, who sits on FutureGen's board, said the US coal industry is determined to develop this type of technology to ensure a 'low-carbon coal' future: "China and the US are both aggressively pursuing 'low-carbon coal' technologies even as the world consumes more coal every day, and will continue for as far out as you can see."

Peabody has led the US energy sector's assault on the Environmental Protection Agency's efforts to curb the US's carbon emissions. Last year, it filed a petition seeking to overturn the EPA's endangerment findings, which allow carbon dioxide to be legally classified as a pollutant. Palmer, who once described burning fossil fuels as "doing God's work", says Peabody will continue to resist any regulation aimed at taxing or capping carbon emissions and will instead seek to overcome the "deep concern around the world about carbon emissions" with technology.

"I don't think a carbon tax will ever be there from a worldwide perspective," he said. "It will be a technology path."

Palmer also defended Peabody's citation of the emails illegally released from the University of East Anglia in 2009 as evidence in attacking the EPA's position on why carbon emissions need to be curtailed: 'The EPA has to follow the law and it has to follow the facts. And it relied on facts that were thrown into question by the hacked climate science emails … If you're telling me that 1+1=3, I'm going to say that your assumptions are wrong and let's go back and see what your assumptions were for reaching '3'. The emails speak for themselves. But that doesn't have us go up to Capitol Hill and say don't do anything [about carbon] under any circumstance. We're not saying that and we're not in that space. We're about finding a technology path.'"

China is energy independent


Second Reactor Using New Chinese Design Begins Operation Near Hong Kong.
The second unit at the new Ling Ao II nuclear power plant in southern China entered commercial operation Sunday (August 7, 2011), Chinese state media reported. It is the second reactor to use China’s new CPR-1000 pressurized water reactor design and the fourth reactor built at Ling Ao’s two plants in the last decade. Like the first unit at Ling Ao II that went online last fall, the new unit produces 1,080 megawatts per hour. (Source: )



"Ditching Nuclear Risks Third ‘Lost Decade’ in Japan on Increased Oil Costs
By Aki Ito and Maki Shiraki - Aug 14, 2011 8:15 PM ET
...
Japan relied on imports to meet 80 percent of its energy needs in 2009, show, against 60 percent for Germany and 22 percent for the U.S. China imported 6 percent of its energy in 2008, according to the latest data available. (article continues)"

Re: China is energy independent

Martian said:

Second Reactor Using New Chinese Design Begins Operation Near Hong Kong.
The second unit at the new Ling Ao II nuclear power plant in southern China entered commercial operation Sunday (August 7, 2011), Chinese state media reported. It is the second reactor to use China’s new CPR-1000 pressurized water reactor design and the fourth reactor built at Ling Ao’s two plants in the last decade. Like the first unit at Ling Ao II that went online last fall, the new unit produces 1,080 megawatts per hour. (Source:

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"Ditching Nuclear Risks Third ‘Lost Decade’ in Japan on Increased Oil Costs
By Aki Ito and Maki Shiraki - Aug 14, 2011 8:15 PM ET
...
Japan relied on imports to meet 80 percent of its energy needs in 2009,

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show, against 60 percent for Germany and 22 percent for the U.S. China imported 6 percent of its energy in 2008, according to the latest data available. (article continues)"

Click to expand...

The measure of power is (Mega)watt. Megawatt per hour would be an increase or decrease of power.

Re: China is energy independent

delft said:

The measure of power is (Mega)watt. Megawatt per hour would be an increase or decrease of power.

Click to expand...

I know. The journalist clearly meant megawatt-hour. However, I don't alter the content of published articles. To be technical, megawatt per hour doesn't mean anything. Megawatt is one million Joules per second. What in the world is one million Joules per second per hour?

The journalist should have said "the new unit produces 1,080 megawatts" or 1.08 billion Joules/second. Alternatively, the journalist could have said "the new unit produces 1,080" megawatt-hours of energy. Anyway, this isn't physics class. The relevant point is China's energy independence with only 6% reliance on imported energy in 2008.

Re: China is energy independent

Martian said:

"Ditching Nuclear Risks Third ‘Lost Decade’ in Japan on Increased Oil Costs
By Aki Ito and Maki Shiraki - Aug 14, 2011 8:15 PM ET
...
Japan relied on imports to meet 80 percent of its energy needs in 2009,

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show, against 60 percent for Germany and 22 percent for the U.S. China imported 6 percent of its energy in 2008, according to the latest data available. (article continues)"

Click to expand...

I'm not sure that PRC only imported 6% of its energy in 2008, so I did some quick checks and found this:

China's imported oil dependence warned
BY　　　　2011-08-15 21:10:35

BEIJING-- China's rising dependence on imported oil is threatening the country's energy security, and the government should step up energy management to ensure supply in future, experts have warned.

China's dependence on imported oil rose to 55.2 percent in the first five months of this year, up from 55 percent in 2010 and 33 percent in 2009, according to the Ministry of Industry and Information Technology (MIIT). Meanwhile, that of the United States has dropped to 53.5 percent.

China's oil consumption surged 10.3 percent year on year to 198 million tons in the first five months this year, according to figures from the MIIT. In the same period, oil imports rose 11.3 percent to 107 million tons.

Tong Xiaoguang, a researcher with Chinese Academy of Engineering (CAE), noted that the rapid growth in both imported oil dependency and oil import volume are signs of rising risks of China's oil trading in the global market.

"China is witnessing growing need of crude oil during its development of urbanization and industrialization," said Tong, who expected China's dependence on imported oil would jump to 60 percent by 2020 and 65 percent by 2030.

China will need 644 million tons of crude oil annually at lowest demand in 2030, according to a CAE study on China's mid- and long-term energy development strategy.

The MIIT expected annual oil consumption to reach 468 million tons this year, up 6.5 percent from a year earlier.

Dong Xiucheng, professor with the China University of Petroleum, said the government should also be aware that China's oil consumption growth has already outpaced that of the overall economy, indicating that China's economic development has largely relied on energy-intensive industries.

China's gross domestic product (GDP) growth stood at 9.6 percent for the first half of the year.

"The risk is that when the country's economic development largely depends on oil consumption, it is easy to be buffeted by oil price fluctuations," Lin Boqiang, an energy professor at Xiamen University.

He took the United States as an example, which has focused on natural gas exploitation in recent years as an alternative for oil, in order to avoid the influence of international oil price fluctuation.

Tong said the government should set a ceiling for oil consumption and adopt measures to keep consumption within the ceiling volume.

To reduce oil consumption growth, there is much room for China to boost its energy efficiency, and the country could also boost the development of natural gas, as it is rich in reserves and less expensive in price.

Wu Libo, deputy director of Environment Economy Research Center and Environment Economy Strategy Research Center of Fudan University, said China should buy more oil resources and develop deep sea oil exploitation technologies to increase supplies.

Meanwhile, China needs to find more alternative energies, including promoting new energy cars, especially electric ones, to reduce the direct use of oil in transportation, Wu said.

(Xinhua)

Click to expand...

For years, President Hu Jintao has been talking about the Malacca Dilemma where a majority of PRC's oil imports goes through. PRC has also been actively trying to source for alternate sources of energy imports (pipe natural gas from Russia, pipe-lines through Myanmar, etc). If energy imports are only 6%, than why the huge effort to diversify sources and secure huge projects overseas?

I wonder if it is a case of sloppy journalism that led to the 6% energy import for PRC in 2008? Or whether the writer has a different idea of what energy import is?

China imported only 8.7% of its energy in 2008

Spartan95 said:

I'm not sure that PRC only imported 6% of its energy in 2008, so I did some quick checks and found this:

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For years, President Hu Jintao has been talking about the Malacca Dilemma where a majority of PRC's oil imports goes through. PRC has also been actively trying to source for alternate sources of energy imports (pipe natural gas from Russia, pipe-lines through Myanmar, etc). If energy imports are only 6%, than why the huge effort to diversify sources and secure huge projects overseas?

I wonder if it is a case of sloppy journalism that led to the 6% energy import for PRC in 2008? Or whether the writer has a different idea of what energy import is?

Click to expand...

China's overall energy use in 2008 was 2,131 million tons of oil equivalent (Mtoe) (see ). Six percent of 2,131 Mtoe is 128 Mtoe.

In 2008, China's import of energy was 2,148 Terawatt-hours (TWh). Since one Mtoe equals 11.63 TWh, China's imports were 185 Mtoe. (See ). [185 imported Mtoe / 2,131 total Mtoe] * 100 = 8.7% imported Mtoe.

It does appear the journalist was wrong. China's total imports of energy in 2008 was 8.7% (e.g. [2,148 TWh imported / 24,614 TWh total] * 100 = 8.7%). (See )

Nevertheless, China is still the most energy-independent among the world's four-largest economies.

1. China - 8.7% reliance on energy imports
2. U.S. - 22%
3. Germany - 60%
4. Japan - 80%

Total domestic energy produced is the sum of domestic coal, hydropower, nuclear, oil, natural gas, wind, solar, geothermal, and biomass. Imported oil comprises only a small portion of China's overall energy use.