A senior manager of Dalian Ocean Shipping Company (COSCO Dalian) said Friday that China should strengthen its maritime petroleum transport capacity to ensure the security of China's oil supply.

 

Meng Qinglin, Managing Director of COSCO Dalian, said at the 2006 China Oil and Gas Summit that with the rise of China's petroleum imports, the weak maritime oil transport capacity has become a major threat to China's oil supply security.

 

China imported 120 million tons of crude oil in 2004, 50 percent from the Middle East, 22 percent from Africa and 12 percent from Southeast Asia. Of the total, 110 million tons were transported by sea.

 

However, China's maritime energy transport capacity is far from meeting this demand, said Meng.

 

According to statistics of Shanghai Shipping Exchange, by October 2005, China had over 590 oil tankers of 12 million deadweight tons (DWT). However, Japan boasts 37.5 million DWT while the United States, 29 million DWT.

 

Meng said that to ensure the minimum security of China's oil imports, the maritime petroleum transport capacity should reach 50percent of the imported petroleum of the country at least.

 

However, in 2004 only 9 percent of China's marine imports of oil was carried by Chinese ship owners.

 

Currently, the size of China's tanker fleet is small and China does not contain enough large-scale oil tankers such as VLCC and Suezmax tankers, said Meng.

 

China has 18 VLCCs now, capable of carrying 3.6 million tons of oil at most, accounting for merely 30 percent of the total transport capacity of the country, said Meng.

 

Besides, most oil tankers of China are old and small.

 

According to Meng, the average age of China's oil tankers is 18years, six years older than the global average. And the average DWT of those tankers is only 20,000 tons, far from meeting the demand of long distance transportation.

 

In the long term, China's oil imports will rise and the overseas oil and gas output of China's oil companies will grow.

 

It is time for China to strengthen its maritime petroleum transport capacity, said Meng.

 

However, as there is a big surplus of tanker capacity in the world, Meng suggested China be prudent in building new oil tankers. Instead, restructuring, second-hand tankers and chartering are better choices for China, said Meng.

 

In this respect, the oil fleet of Hong Kong is the primary choice for China, he said.

 

Meng also suggested the Chinese government issue preferential policies such as tax reduction or subsidies to encourage closer cooperation between Chinese oil companies and ship owners.

 

COSCO Dalian is the tanker company of China Ocean Shipping Group Company. It has 23 tankers of 2.6 million DWT.

 

(Xinhua News Agency March 11, 2006)