China's ministry of land and resources announced yesterday on its website that the country had more oil reserves than expected, news that may bring relief to acountry increasingly concerned with its growing reliance on crude oil imports.
The ministry cited a report by China Petroleum and Chemical Corporation, China's second largest oil company, which identified 6.5bn tonnes (47bn barrels) of proven oil reserves in the country, referring to oil that is recoverable from known oil reservoirs at a reasonable cost.
The amount is much higher than generally believed. International studies, including BP's just-published statistical review of world energy, put it closer to 3.2bn tonnes.
While the accuracy of oil reserve estimates is notoriously difficult to establish, the Chinese report is likely to be studied closely by world experts, because the country's demand for oil, currently second in the world behind the US, is often blamed for the rising cost of crude.
The study showed proven reserves making up 43 per cent of total recoverable reserves in the country, which meant that the amount of oil that could be practically extracted would grow at a steady pace for the next 20 years.
The ministry's upbeat statement was qualified, however, by the admission that most of China's oil lies under deserts, loesses and other hard-to-get-to places that put up production costs.
Meanwhile, the country's top energy companies have been accused of wasting their exploration licences, a practice blamed for making China's energy shortage more critical.
The ministry's annual audit of oil and gas exploration projects found that up to half of the 800-plus oil and gas exploration projects in the country did not receive the minimum amount of investment required in 2003.
The report, published on the Oil News website yesterday, did not provide a break-down for different kinds of natural resources. Given the limited demand for natural gas in China and the high cost of oil, it can be assumed that most of the licences being questioned are for gas exploration. Is China's growth sustainable?