IEA report forecasts soaring Chinese oil imports

ANDREAS EVAGORA, Associated Press Writer Monday, March 20, 2000 Breaking News Sections

(03-20) 14:56 PST PARIS (AP) -- China's long-term level of oil imports will outstrip by three times the country's own forecast, the International Energy Agency said Monday.

The figures suggest that China will become a far more influential player in the global oil market and in the oil-rich Middle East, the agency said.

``China's economic growth has outstripped its own energy resources,'' said William Ramsey, deputy director of the IEA, part of the Paris-based Organization for Economic Cooperation and Development.

``China is an energy superpower second only to the United States. Meeting its energy needs is one of the most difficult challenges China will face.''

Separately, IEA Director Robert Priddle urged OPEC countries to release ``substantial'' extra oil supplies to help reduce soaring prices at the pump.

Speaking in advance of the March 27 meeting of the Organization of the Petroleum Exporting Countries, Priddle said that extra oil supplies are needed because ``world stocks are at an unusually low level. We need substantial additional supplies.''

The oil cartel cut production by 4.3 million barrels a day more than a year ago after prices had plummeted to below $11 a barrel. Since then, prices have lept as high as $34 a barrel, sending prices at the pump soaring.

The IEA estimates that there is a shortfall of about 2.5 million barrels a day and warns that if prices don't fall soon, buyers will be encouraged to switch to other energy sources.

Priddle did not recommend a supply figure that would reduce prices. However, he said an extra 500,000 to one million barrels a day are needed to balance supply and demand in the April-June period, with supplementary levels required to make up the shortfall in reserves.

The IEA released a report Monday on China's energy situation and forecast that Chinese imports will rise to eight million barrels a day in 2020 -- roughly three times China's own estimates. China currently imports one million barrels a day.

The disparity between IEA and Chinese estimates is accounted for by differences in how new technology, energy efficiency and offshore development will impact China's demand for oil imports.

``Eight million barrels a day is a high number,'' Ramsey said at a news conference. ``The market would be concerned with that amount in a tight oil market but can accommodate it in terms of availability. It is a matter of setting up new commercial relationships without conflict.''

Global production is predicted to rise from 75 million barrels a day today to 111 million barrels a day in 2020.

China has tried to exploit its domestic resources, but the IEA says that the country's economic growth will overwhelm those efforts.

China is already the world's second largest energy consumer after the United States. The IEA said China will be the second largest importer of oil well before 2020.

Soaring demand for international oil will likely see it play a much greater role in the oil-rich Middle East.

``There is an inevitability of increasing dependency on the Middle East for China,'' Ramsey said.

To meet growing energy demands, China will look to diversify its energy sources, both at home and abroad, said Wu Jianmin, China's ambassador to France, with natural gas and nuclear energy playing a greater role.

``Our new strategy is to develop resources in the western part of China,'' Wu said. ``One of the top priorities is a 2,300-mile gas pipeline from Shanshan of China to Shanghai.''

The ambassador did not comment on the agency's new report.

http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2000/03/20/international1756EST0738.DTL&type=business

-- Martin Thompson (mthom1927@aol.com), March 20, 2000