China will reduce its reliance on petroleum imports by basing its energy supply on coal and developing new and renewable energies, said a senior official with the National Development and Reform Commission (NDRC) on Tuesday.

 

China successfully reduced its net imports of petroleum last year, said Zhang Guobao, vice minister of the NDRC at the 7th Sino-U.S. Petroleum & Natural Gas Forum held in Hangzhou, capital of east China's Zhejiang Province.

 

According to Zhang, China's oil consumption was 317 million tons last year, down slightly from the previous year and its net imports of petroleum are 136 million tons, less than that of 2004.

 

The Chinese economy has maintained a growth of over 10 percent for three years running so it is normal for China to see a rise in its oil imports as well as its demand for energy, said Zhang.

 

But China has been trying to reduce its reliance on imports of petroleum which have been over 40 percent, he said.

 

According to statistics of the NDRC, China's coal output reached 2.22 billion tons last year and coal supports 68.7 percent of China's consumption of non-renewable energies with petroleum and natural gas, 24 percent.

 

China is the second largest energy producer in the world and the top exporter of coal and coke.

China's imports of oil only accounted for six percent of the total world oil trade in 2005 and China has been playing a limited role in pushing up the oil price, said Zhang.

 

As China reduced its oil imports in 2005, the world still saw the oil price soar by 36.8 percent from the previous year, which "shows that China's effect on the soaring international oil price has been seriously overplayed," said Zhang Guobao.

 

According to Wang Nengquan, the chief-economist with Sinochem International Oil Co. Ltd., hedge funds and other speculative funds are playing an important role in the current crude oil futures market.

 

According to estimates, hot money flowing into the crude oil futures market has been over US$1 trillion, which "makes the price of oil far away from the real value", said Wang.

 

Both Chinese and US officials and entrepreneurs attending the forum expressed their concerns over the effects of the soaring oil price on the world economy and agreed that both countries should strengthen cooperation to face challenges of energy supply.

 

(Xinhua News Agency September 13, 2006)