The Challenges Brought By The Shortage of Oil And Gas In China And Their Countermeasures Pang Xiongqi, Meng Qingyang Zhang Jun, Natori Mariko China University of Petroleum in Beijing Key Laboratory For Hydrocarbon Accumulation Mechanism, Ministry of Education, PRC ： Tele: Fax: Mobile:

1. Brief Introduction of China ★ ★ Location:Country land area: Location: Northern Hemisphere, Asia Country land area: 9.6 million km 2 Population:Foundation: Population: About 1.3 Billion Foundation: in 1949, PRC Nationalities:Open door policy: Nationalities: 56 (Mainly Han Nationality) Open door policy: Since 1978 Beijing, China Lisbon, Portugal

2. Brief Introduction to Oil and Gas Exploration in China Oil and Gas Resources are Distributed in Four Areas: East, Middle, West and South China Sea Brief Introduction of Oil and Gas Exploration in China (until the end of 2003) : Total Amount ： Total Amount ： Oil= 101 billion tones ； Gas= 42 trillion m 3 Proved ： Proved ： Oil= billion tones ； Gas= trillion m 3 Proved Recoverable ： Proved Recoverable ： Oil= billion tones ； Gas= trillion m 3 Left Recoverable ： Left Recoverable ： Oil= billion tones ； Gas= trillion m 3 I. Forward I. Forward ② ③ ④ ① Legends ① East area ② Middle area ③ West area ④ South China sea area

3. Brief Introduction to China’s Shortage of Oil Comparison between Oil Production and Demand in China (From China National Statistics Bureau, 2004) Unit: million tones I. Forward I. Forward

3. Brief Introduction to China’s Shortage of Gas Comparison between Gas Production and Demand in China (From China National Statistics Bureau, 2004) I. Forward I. Forward Gas Production Gas Consumption Unit: hundred million cubic meters

II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources The GDP increases very fast in recent 20 years in China and the average increase rate can reach 9% per year Brief introduction to economy growth in recent 20 years in China (From China National Statistics Bureau, 2004) 1. The fast growth of economy in China consumes a lot of oil and gas resources

The relation between oil consumption increase and yearly economy increase in China (From China National Statistics Bureau, 2004) II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 1. The fast growth of economy in China consumes a lot of oil and gas resources The increase of demand on oil and gas per year will reach 0.65% with 1% increase of China’s GDP. oil consumption increase rate /economy increase rate

The oil consumption increase curve with time in China II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 1. The fast growth of economy in China consumes a lot of oil and gas resources The increase rate of yearly oil consumption in recent 10 years is five times higher than that of 10 years before.

Yearly Oil consumption of China has reached 3 hundred million tones and just next to the U.S.A Yearly gas consumption rate of China is increasing fast but relatively still little comparing with other developed countries II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 1. The fast growth of economy in China consumes a lot of oil and gas resources

Million barrels per day 2004 Oil & Gas Journal July 5 th 2004 Australia uses 0.8 China6.3 US20.5 World81 US 1 cubic km oil / year Australia China United States 1 km l l II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 1. The fast growth of economy in China consumes a lot of oil and gas resources Oil consumption of China is 7.8 ％ of the consumption all over the world, while U.S.A is 25.3%.

2. The oil consumption of China will keep growing with the development of economy in the future Forecast on economy increase of China in the coming 10 years (Beijing Statistic information website, 2005) The GDP growth rate will be averagely 7.5%~9% per year with personal GDP reaching 2600~3100 dollars in the coming 10 years. II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources

Forecast curves on oil demand by different scholars of China in the coming 15 years The oil demand of China in 2020 will be today’s 1.5 times and reach 4 hundred million tones II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 2. The oil consumption of China will keep growing with the development of economy in the future

II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources 2. The oil consumption of China will keep growing with the development of economy in the future Forecast curves on gas demand by different scholars of China in the coming 15 years The gas demand of China will be today’s 3.5 times and reach 180 billion cubic meters in 2020.

1. Brief Introduction to Oil and Gas Exploration in China ( until the end of 2003): III. The Brief Introduction to Oil and Gas Production in China and Their Prediction Total amount ： oil= 101 billion tones ； gas= 42 trillion cubic meters Accumulated discovered geological reserves ： oil= billion tones ； gas= 3.87 trillion cubic meters Accumulated discovered recoverable reserves ： oil= billion tones ； gas= 2.47 trillion cubic meters Remaining recoverable reserves ： oil= billion tones ； gas=2.09 trillion cubic meters Proved rate: oil= 38.9% ； gas= 23.0%

Production (hundred million cubic meters) Production (million tones) 2. Yearly production curves of oil and gas with time since 1949 oil gas III. The Brief Introduction to Oil and Gas Production in China and Their Prediction

3. Oil and gas production in different areas of China East China Middle China West China China’s Sea East China Middle China West China China’s Sea III. The Brief Introduction to Oil and Gas Production in China and Their Prediction

4. Forecast approach and principle on China’s future oil and gas production Typical Oil Depletion Curve Norway (North Sea) Werner Zittel, LBST III. The Brief Introduction to Oil and Gas Production in China and Their Prediction

Relationship among the oil and gas resources, proved and recoverable resources, remaining recoverable resources and yearly production Oil and gas resources (hundred million tones) Accumulated production Proved recoverable resources Proved resources Theoretical maximum resources Yearly proved resources Yearly production Exploration and development procession Remaining recoverable resources III. The Brief Introduction to Oil and Gas Production in China and Their Prediction 4. Forecast approach and principle on China’s future oil and gas production

Relationship among the oil and gas resources, proved and recoverable resources, remaining recoverable resources and yearly production of China from 1970 to 2003 III. The Brief Introduction to Oil and Gas Production in China and Their Prediction 4. Forecast approach and principle on China’s future oil and gas production Exploration fruits (10 8 tones)

5. Forecast on China’s oil and gas production by different scholars in the coming 15 years. Oil Gas Production (million tones) Production (hundred million cubic meters) III. The Brief Introduction to Oil and Gas Production in China and Their Prediction

6. Forecast on oil and gas production until 2050 Yearly oil production (million tones) Yearly gas production (million tones)

6. Forecast on oil and gas production in China III. The Brief Introduction and Forecast on Oil and Gas Production in China Oil Gas } } 2005 Forecast on China’s oil and gas production Million Tones Oil production Gas production 2026

1. The shortage of oil and gas is an inevitable problem faced by human beings By 2030, the gap is equivalent to 6,000 nuclear reactors 2002 World oil shortfall scenarios Past Production of Oil Forecast Production Demand Growth Gb /year } Shortfall 2030 IV. The Brief Introduction to Oil and Gas Shortage in China and Their Prediction time

2. The shortage of oil in China is shown by large importation. Oil production Oil demand Importation is 41% of Total demand in 2004 Importation is 50% of Total demand in 2010 } Shortfall Production and demand (million tones) Time ● China began to import oil in 1993 IV. The Brief Introduction to Oil and Gas Shortage in China and Their Prediction

2. The shortage of gas in China is shown by large importation Gas production Gas demand } shortfall Begin to import gas Production and demand (hundred million cubic meters) 2004 ● IV. The Brief Introduction to Oil and Gas Shortage in China and Their Prediction

Challenge I ： Restrain economy development Environment Oil is the blood of industry. The industry cannot develop without it. It costs us a lot of foreign exchanges to import oil. The number of 2004 reached 300 billion RMB. The expense on yearly importation will keep increasing with the increase of importation and higher oil price. Space industry Transportation Defense Chemical Industry Traffic …… …… Oil & gas Bottleneck V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

II Challenge II : Affect people’s life and environment China has a large population and is in shortage of energy. People are still using traditional methods to utilize the energy. It causes a series of environment problems: decrease of forests and plants, decline of earth and organic matters in the soil, growth of desert, and so on. China has the largest coal production and consumption. The burning of coal gives out 85% of the country’s SO 2 ， 85% of the country’s CO 2 ， and 75% of the country’s dust. The loss cost by acid rain is 2% of the GDP in The potential effect of CO 2 is a key factor in the energy field. World U.S.A China coal hydro oil gas nuclear V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

III Challenge III ： Affect country security Gulf War Oil and gas are important strategy resources. In modern war, the production and procession basement of oil and its transportation tools are the main attacking targets by enemies. The shortage of oil will seriously threaten the security of the country. Now the pillage on oil and gas resources is so furious around the world. The past Gulf War and newly ended Iraq War are all because of the abundance of oil resources in the Middle-east. Iraq War V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

2005 World oil shortfall scenarios Past Production of Oil Forecast Production Demand Growth Deprivation, war City design / lifestyle Pricing / taxes Transport mode shifts Efficiency Other petroleum fuels gas, tar-sands Other fuels Gb/year no single “Magic Bullet” solution no single “Magic Bullet” solution probably no replacement ever for cheap plentiful oil probably no replacement ever for cheap plentiful oil Urgent preparation and adjustment are vital Urgent preparation and adjustment are vital How to deal with these challenges brought by the shortage of oil and gas ? V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

China adopts four measures to solve the shortage of oil and gas resources problems 2005 Oil and gas production Oil and gas demand Develop domestic energy Utilize overseas energy Find substitute energy Take saving measures Oil and gas production and demand (million tones) V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

 China’s oil and gas resources: Oil: 104 billion tones, proved rate:38.9% (the world:73.0%) Oil: 104 billion tones, proved rate:38.9% (the world:73.0%) Gas: 42trillion cubic meters, proved rate:23.0% (the world: 60.5%) Gas: 42trillion cubic meters, proved rate:23.0% (the world: 60.5%) Oil and gas resources distribution and exploration situation in China Measure I ： Innovate geological theory and fasten the development and utilization of domestic oil and gas resources V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

II Measure II ： Participate international competition and broaden the benefit proportion of international oil and gas resources The situation and fruits of China’s overseas oil and gas exploration The benefit oil and gas resources are totally million tones, among them, PetroChina million tones, CNOOC 5 million tones, SINOPEC 0.31 million tones. V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

: Measure III: Increase the expenses on science and technology and develop substitute energy Substitute energy ★ Coal to oil ★ Develop hydrogen energy ★ Ethanol gasoline ★ Develop biomass energy ★ Utilizing wind and solar energy ★ Utilizing nuclear energy Oil and gas are non-renewable energy resources and will be used up in some day. Governments in all the countries should take measures to look for substitute energies. V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

Measure IV : Adopt saving measures and guarantee the stable development Measures to Save oil & gas ★ Change life style ★ Develop public transportation ★ Decrease the consumption of oil by cars ★ Improve the efficiency of oil and gas utilization Oil is a high-efficiency energy and gas is a clean energy. The oil price will keep increasing, so adopting oil saving measures will be the direction we take efforts to. V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

China US ★ What is our purpose to take these measures? V. The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasures

Thanks for your attention Ⅵ. Conclusions 1.China’s economy is still in fast development stage, oil and gas resources are the most important energies. 1. China’s economy is still in fast development stage, oil and gas resources are the most important energies. 2. It is inevitable that oil and gas will be used up in the future, the predicted peak production of oil and gas in China will be in It is inevitable that oil and gas will be used up in the future, the predicted peak production of oil and gas in China will be in Chinese government now is paying much more attention to this serious problem and four measures are taken to solve this problem. 3. Chinese government now is paying much more attention to this serious problem and four measures are taken to solve this problem. 4. We believe that human beings can take advantage of their talents and knowledge to solve this problem. 4. We believe that human beings can take advantage of their talents and knowledge to solve this problem.