China and the Global Energy Crisis: Development and Prospects for China's Oil and Natural Gas

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China and the Global Energy Crisis: Development and Prospects for China's Oil and Natural Gas, by Tatsu Kambara and Christopher Howe. Cheltenham: Edward Elgar, 2007. xvi + 143 pp. £49.00/US$85.00 (hardcover).

Triggered by its rapid economic development for the past 25 years, China shifted to being a net oil importer in the mid-1990s, and then became the world's second-biggest oil consumer and the third-largest oil importer in 2004. Given the size of the country's territory, population and economic potential, China's energy demands and the government policy on energy security have attracted great attention from the world, but this has often been accompanied by pessimism. Much research on China's energy security strategies has suggested that the high oil prices in the world market over the past few years are largely due to China's growing oil imports, and the situation will remain so for the next few decades.

This book, however, argues that such analyses are misleading, as China's increasing oil imports are due not only to the depletion of its current oil fields but also to other policy and administrative factors, such as planning failure in China's energy sector, the disconnection of domestic refined fuel prices from imported crude oil prices, and China's imbalanced industrial structure. In addition, China's less-advanced technology for petroleum exploration is problematic.

This volume, jointly written by an expert on China's petroleum industry and one on Sino-Japanese relations, is largely based on Tatsu Kambara's book, China's oil and Natural Gas, published in 2002 in Japanese. The English version has been strengthened considerably by setting China's modernization program as a general framework for the analysis of China's energy policy, and by linking the development of the Chinese petroleum industry to China's energy policy planning, its petroleum exploration technology, and the availability of overseas oil supplies. Kambara and Howe provide sophisticated geological information on China's oil and gas reserves to support their analysis.

Comprising seven chapters, the book analyzes the development of China's petroleum industry and the evolution of the administration of China's petroleum sector between the 1960s and 2005, with the focus on three main issues related to China's oil and gas industry.

The first (examined in Chapters 1 and 3) is the evolution of China's oil and gas industry and the bureaucratic structure in the petroleum sector. Based on their historical review, Kambara and Howe believe that the current problems facing China's energy sector, such as the decline of the oil output and poor policy coordination, are rooted in three interlinked aspects. First, the preferential policy in finance and human resources enjoyed by the oil industry during the Maoist period is no longer available in the reform era. …