China vows to bolster energy security as Ukraine war stokes ‘period of turbulence’
- Zhang Jianhua, chief of the National Energy Administration, says China will boost domestic oil and gas supply, while building international energy partnerships
- There has been no immediate response from Beijing after the Biden administration announced it would release 1 million barrels of crude a day over the next six months
Zhang Jianhua, chief of the National Energy Administration, said the international political and economic landscape has entered a “period of turbulence” that was threatening recovery from the coronavirus pandemic and global supply chains.
“The new and old energy risks are intertwined,” he wrote for the Communist Party’s People’s Daily on Friday. “The weak link of oil and gas resources has existed for a long time, while regional and periodical energy supply problems occur from time to time.”
Rising prices are taking a heavy toll on China, the world’s largest crude oil importer, and come amid heightened concern about energy security, as the country imports nearly 70 per cent of its crude oil and more than 40 per cent of its natural gas.
Chinese authorities will use a number of methods to strengthen the energy supply chain, including increasing domestic oil and gas production, improving reserve capacity, and enhancing international energy cooperation, Zhang said.
“We’ll build energy partnerships along the belt and road route and steadily expand the ‘circle of friends’,” he said.
“Pragmatic cooperation will be promoted with major energy and resource producing countries, and strengthen the interconnection of energy infrastructure with neighbouring countries.”
Russia, a key member of the Belt and Road Initiative, is the second largest source of Chinese crude imports after Saudi Arabia.
Energy imports from Russia rose 47.4 per cent year on year to 334.2 billion yuan (US$52.5 billion) in 2021, about two thirds of China’s total imports, customs data showed.
There has been no immediate response after the Biden administration announced on Thursday it would release 1 million barrels a day over the next six months.
Tian Miao, a senior analyst with Everbright Securities International, said China may open its strategic stockpile, but the amount would be too small to generate a real impact.
“Considering its high reliance on overseas oil, China must continue to import from Russia. The purchases won’t stop,” she added.
Before Western nations launched a wave of sanctions on Moscow, including a limited range on its fossil fuel sector, China clinched several energy deals with its northern neighbour in early February.
It signed an agreement to be supplied with 100 million metric tonnes of Russian crude oil over the next 10 years and a 30-year gas supply contract.
Coal and thermal power will remain the bedrock of China’s energy security strategy, Zhang wrote in the article.