China Takes Energy Pledge


2007-01-05
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Sept. 13, 2003: A pool of oil gives a reflection of an oil refinery in Lunnan, on the edge of the Taklimakan Desert in western China's Xinjiang province. Photo: AFP/Frederic J. Brown

China has promised major energy reform steps to cooperate with the United States and other consuming nations, but analysts doubt that Beijing will alter its policies any time soon.

At a five-nation energy summit in Beijing Dec. 16-17, Chinese, Japanese, Indian, South Korean, and U.S. officials agreed to a series of policies to promote stability on world energy markets and avoid sudden price hikes. In a statement, Premier Wen Jiabao pledged China’s support for a broad range of international energy goals.

Wen said that China is willing to cooperate in energy development and to “contribute to maintaining the stability and security of world energy supply,” the official Xinhua news agency reported.

The Beijing agreement covers many long-standing concerns with China’s energy policies, particularly regarding transparency.

I think China signed it in part so that the meeting could be characterized as a successful meeting of the five energy ministers.

Officials of the Paris-based International Energy Agency (IEA) have repeatedly urged China to provide regular information on its inventories of crude oil, as do countries in the West. The information is crucial in calculating world oil demand, so that the market can adjust prices accordingly.

Chinese officials have also refused to disclose the levels of China’s new strategic oil reserve.

On Dec. 5, Reuters estimated that China had imported about 8.2 million barrels of oil in November for its new strategic storage facilities near the eastern city of Ningbo, south of Shanghai. This was about twice as much as the market had expected.

In interviews with Radio Free Asia, experts said that China’s practices are unlikely to change soon.

Robert Ebel, chairman of the energy program at the Washington-based Center for Strategic and International Studies, said that China’s support for the joint statement is probably more symbolic than substantive.

“I think China signed it in part so that the meeting could be characterized as a successful meeting of the five energy ministers,” Ebel said. “I think that they signed it knowing that they couldn’t live up to some of the things they signed on to, but that doesn’t bother them.”

Ebel noted that China’s government has not yet issued reports on the volume of oil held in inventory by its state-owned oil companies. Ebel also questioned the likelihood that China would help to stabilize world oil markets by coordinating policies in the use of strategic reserves.

“They would like to see the world oil market stabilized. Whether they contribute to that stabilization is another question … Whether they will follow through in times of emergency remains to be seen.”

Philip Andrews-Speed, a China energy expert at the University of Dundee in Edinburgh, Scotland, said that adherence to the agreement made at the Beijing summit would mark a major change for China. But he, too, has seen no sign that China plans to provide the market information the document calls for.

There may be administrative problems in simply collecting accurate information, Andrews-Speed said. China disbanded its Energy Ministry in 1993 and now relies on a vice-ministerial energy office and an understaffed Energy Bureau under the National Development and Reform Commission (NDRC).

“Does the government itself have the information to give? I think if the government did have, there’s a chance that it could give it. But I’m not clear that there is a single office in China that has all this information.”

China’s willingness to coordinate the use of strategic oil stockpiles with the IEA in energy emergencies also remains a question mark, Andrews-Speed said.

“Certainly to date, the Chinese have been quite clear that they are going to use these reserves in their own way and not necessarily adhere to the IEA conventions on when to draw them down.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.

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