China’s Energy Challenge: Adjusting to Higher Prices Tao Wang Head of Asia Economics, BP Oct 13, 2006, Moscow

2 China’s Energy: Some Basic Facts Xinjiang Tibet Heilongjiang Hebei Beijing Shandong Anhui Jiangsu Qinghai Gansu Inner Mongolia Sichuan Yunnan Guizhou Chongqing Guangxi Hunan Jiangxi Hainan Shaanxi Shanxi Guangdong Fujian Zhejiang Henan Taiwan Liaoning Jilin Tianjin Ningxia Hubei Shanghai 2 nd largest energy producer 2 nd largest energy consumer 2 nd largest oil consumer, 3 rd importer 2 nd largest CO2 emitter 2 nd largest power market Largest SO2 emitter 4 th largest GDP, 2 nd largest GDPppp

3 China’s primary energy consumption mix 2005 Total consumption: Mtoe 47bcm 7.0 mb/d Mtoe 53.1 Mtoe Mtoe

4 China’s net oil imports Million b/d

5 China and World Oil Consumption Growth Kb/d

6 Core of China’s Energy Security: Oil Security: Increase domestic production Import diversification “Go out” strategy “Oil substitutes” Strategic petroleum reserves Refinery upgrading Trading capabilities Coal Security: 2.19 bt production in 2005 Sustainable production at? Transportation bottleneck Pollution already exceeding limits Mining safety disastrous: 3 lives/mt Clean use a priority Energy saving - 20% energy/GDP by 2010 Energy saving society Focused on structural change Other increase renewable to 15% by 2020 Build 30 GW nuclear power

7 Key to Success of Adjustments Allow market force to work Cooperation