SHANGHAI (Interfax-China) -- China's proven crude reserves dropped 12.33% last year to 2.19 billion tonnes from a year earlier while natural gas reserves surged more than 50% to 2.27 trillion cubic metres, far higher than the 1.15% average increase of world reserves, the National Development and Reform Commission (NDRC) said.
China is the only country that posts significant dip in crude reserve while Kazakhstan in Central Asia and the African country Angola recorded soaring increase of almost 50%, according to the NDRC report.
China's crude reserves by the end of last year dipped one place in world's ranking to 13th while natural gas jumped to the 15th from 21st in 2005, quoting figures released by the American trade magazine Oil & Gas Journal.
Saudi Arabia tops the oil reserve list with 35.58 billion tonnes and Russia leads the natural gas ranking by 47.57 trillion cubic metres.
Kazakhstan and Turkmenistan also saw sharply rising natural gas reserve last year, in addition to China.
China produced an estimated 185 million tonnes of crude oil, ranking the fifth after Russia, Saudi Arabia, the Untied States and Iran.
In the next two decades, China's oil consumption is expected to grow at a rate of 7.5% per year. Latest stats put consumption at 6.5 million barrels per day. China consumed 46 billion cubic meters of natural gas demand in 2005 and demand is expected to grow 15% per year through 2020.
Today, Shanghai fuel oil futures retreated after international crude prices retreated below the $55 per barrel level overnight as traders doubted OPEC's implementation of production cuts beginning February 1.
The weekly U.S. oil inventories data due Thursday might be a key factor shaping crude prices this week, said analyst Zhao Yucheng from Jianyin Futures.
If a lower-than-expected U.S. oil inventory build up is seen, crude prices might climb back to $55, but the reverse could push crude back down to the $50 benchmark.
Commentary
Since the early '90s, China oil production has not been able to meet the pace of growth demand. Latest figures show that there has not been the expected slowdown, and China's oil intensive growth will result in continued reserve depletion and an ever increasing reliance upon imports.
It is not therefore surprising that China has declared its intention to build a strategic reserve. Even the 100 million barrel reserve target will not provide adequate fallback. Securing new alliances/resources remains a top priority.
Natural gas production has peaked and growth in global reserves is expected to shrink further. The increase in China's reserve growth rate is not sustainable and, again, reliance upon its Russian neighbours as well as Iran, will become more focused.
© Interfax-China 2007
This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 5 free copies of this, please e-mail alison.crawford@interfax.co.uk.
