Sinopec Chairman: China Needs to Change Energy Strategy

From The Wall Street Journal

Fu Chengyu, the chairman of state energy giant China Petrochemical Corp., made a name for himself as a consummate dealmaker in recent months as he pursued oil and gas assets in North America, Europe and elsewhere.

His eyes are now focused back at home.

Even as an oil-and-gas boom in North America is helping to redraw the world’s energy maps, Mr. Fu says the added supplies won’t be nearly enough to fill skyrocketing demand, driven by rapid industrialization in China and elsewhere.

He says China must embrace domestic resources besides oil, such as coal, in a bid to curtail rising crude imports, which hit about 254 million tons in 2011, up 6% from a year earlier. Mr. Fu said at its current trajectory, China would require 600 million tons of crude annually by 2020. By comparison, 2011 demand was 9.2 million barrels per day, or around 460 million tons a year, according to data from the International Energy Agency.

“If we don’t change, China will really threaten the world” and will face limits on its own growth, Mr. Fu said in a rare interview, nodding to fears in some corners that rising energy demands from China will bring it into greater competition with other high consumers of energy.

“Over the long run I believe the rate of growth of supply will be not enough to meet the growth rate of demand,” he added.

Instead, Mr. Fu said, Chinese energy companies including China Petrochemical, also known as Sinopec, needed to embrace alternatives fuel sources and curtail crude imports to help alleviate what he described as a global oil squeeze over the long-term, despite current optimism over booming production in North America.

In the coming decades, he said, “we might not use much oil as our feedstock for chemicals [production]. We should use more coal to be a stock for chemicals so that we import less crude and we depend less for the import of crude.”

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