China's 2005 crude output climbs 3.7%

Beijing: China produced 181 million tonnes of crude in 2005, the official Xinhua news agency said yesterday, implying the country pumped 3.7 per cent more than it did the previous year.

The strong increase in production, together with tepid growth in implied oil demand, helped limit the rise in imports which soared 35 per cent in 2004 to 3.3 per cent last year.

China is keen to curb its dependence on foreign oil, which last year supplied 41.2 per cent of its needs, according to the Xinhua figures.

The report, on a speech given by a senior energy policy-maker, also said China produced 49 billion cubic metres of natural gas a 20 per cent rise and more than 2.1 billion tonnes of coal last year.

The article did not provide a direct source for the figures, but they were included below quotes from Ma Fucai, a member of the government's group on energy and former general manager of CNPC.

Ma said China, which plans to focus on exploring its western and offshore basins over the next five years, now had 24.8 billion tonnes of proven reserves and 4.4 trillion cubic metres of natural gas reserves.

It hoped to add 900 million to 1.0 billion tonnes of crude reserves and 400 billion to 450 billion cubic metres of natural gas reserves a year between 2006 and 2010, he added, without saying how China would achieve this.

Hydropower would account for up to 10 per cent of all energy used in China by 2010, up from the current 7.9 per cent. Installed nuclear power capacity would be 40 gigawatts and wind power capacity would reach 30 gigawatts by 2020, the report said.

China's state council, or cabinet, yesterday also approved long-term development plans for the country's oil refining and ethylene industry, Xinhua said, but it gave few details.

However the list of problems the industry faced including insufficient capacity and low production levels will likely encourage industry experts who had worried that a glut of recent investment could lead to overcapacity in the sector.

Beijing sees 2006 price at $55

China's energy policy-making body forecast crude at around $55 a barrel this year, the country's official media reported yesterday, in a move industry experts linked to Beijing's efforts to revamp domestic prices.

Beijing, which has rarely made public its predictions of crude oil prices, was widely expected to soon launch a scheme of setting its domestic pump rates by linking them to global crude instead of to oil product markets.

"By forecasting crude price the government is signalling that it wants to use it as a benchmark to reform product prices," said Chen Wei, Beijing-based veteran industry expert with independent Eagle consultancy. "China can't carry on doing the macro price control like it did most of last year, with little link to any price benchmarks."

Average prices would be slightly below 2005 levels but would likely fluctuate greatly because of speculation, the China Securities Journal said, quoting a report from the National Development and Reform Commission, China's super ministry for energy policy.

In contrast, a Reuters poll of 30 analysts forecast a slight price increase to $57.31 per barrel for US light crude oil futures, from $56.70 last year.