Daqing poster
China has a huge appetite for oil and this hunger will no doubt increase no matter what happens to prices and supply. To meet demand China has invested billions of dollars in pipelines, oil storage tanks, and other oil- related infrastructure. It is also taking measures to conserve energy such as imposing fuel economy standards on new cars, so it doesn’t have to buy so much imported oil.

The Chinese government controls oil prices and has kept them artificially low through subsidies. Raising prices is very risky politically. This policy has created shortages by giving domestic oil companies and suppliers incentive to sell oil abroad at high international prices rather than sell them at home at artificially low prices. In 2005 oil exports jumped by 30 percent as China was reaching around the globe to meets its domestic demand

China began filling the tanks for its first strategic oil reserve in January 2001. In 2004, it began work on building dozens of large oil storage tanks for strategic oil reserves that could keep China going for as long as three months if imports were suddenly to dry up.

Crude oil:
production: 3.773 million barrels per day (2018 est.), seventh in the world.
exports: 57,310 barrels per day (2015 est.), 40th in the world.
imports: 6.71 million barrels per day (2015 est.), number two in the world.
proved reserves: 25.63 billion bbl (1 January 2018 est.), 12th in the world. [Source: CIA World Factbook, 2022]

Refined petroleum products:
production: 11.51 million barrels per day (2015 est.), number two in the world.
consumption: 12.47 million barrels per day (2016 est.), number two in the world.
exports: 848,400 barrels per day (2015 est.), 9th in the world.
imports: 1.16 million barrels per day (2015 est.), 4th in the world.

Petroleum fulfilled 18.9 percent of China’s energy requirements in 2020, up from 13.5 percent of China’s energy requirements in 2004. Electricity: from fossil fuels: 62 percent of total installed capacity (2016 est.), 124th in the world. [Source: Library of Congress, Statista, CIA World Factbook, 2022]

Oil Consumption in China

China is the world's number two consumer of refined petroleum products. It consumed 12.47 million barrels per day in 2016, compared to about 8 million barrels of oil a day in 2010. By comparison the U.S. consumes about 20 million barrels a day. On a per capita basis China's oil consumption is relatively low. In 2010, China with nearly a quarter of the world’s population consumed less than a tenth of the world’s oil while the United States with less than 5 percent of the world’s population accounted for nearly a quarter of global oil consumption.

China’s oil consumption growth accounted for an estimated two-thirds of incremental global oil consumption in 2019. China consumed an estimated 14.5 million barrels per day of petroleum and other liquids in 2019, up 500,000 barrels per day, or nearly 4 percent, from 2018.. The warmer-than-normal 2019–20 winter in the northern hemisphere and ongoing efforts to prevent the spread of COVID-19 drastically lowered China’s growth in petroleum products, primarily jet fuel, gasoline, and diesel, with the most acute demand decline occurring during the first quarter of 2020. [Source: U.S. Energy Information Administration country analysis briefs, September 30, 2020]

Diesel and gasoline accounted for the largest shares (27 percent and 24 percent, respectively, in 2018) of consumed oil products during the past several years. However, the pace of oil demand growth in the transportation sector has declined in the past few years because of China’s economic slowdown, stricter environmental measures resulting in higher fuel efficiency standards and restrictions on urban vehicle use, and a higher penetration of alternative fuel vehicles (electric vehicles, compressed natural gas vehicles, and trucks and trains running on liquefied natural gas). Alternative fuel vehicles have grown exponentially in China and have displaced a growing amount of gasoline and diesel each year.However, the sale of vehicles that run on alternative fuels fell slightly in 2019 from 2018 following China’s subsidy cut for these vehicles in July 2019. China, which has some of the most stringent global fuel standards, implemented national fuel standards equivalent to Euro VI to lower sulfur standards in gasoline and diesel starting in 2020.

Per capita gasoline consumption: .22 liters per day, compared to 4.39 liters per day in the United States and 0.01 liters per day in Bangladesh. [Source: globalpetrolprices.com ]

Growth of Oil Consumption in China

China doubled its oil consumption between 1985 and 1995 and doubled it again between 1995 and 2005, rising from 90 million tons in 1985 to 209 million tons in 2004, with an average annual increase of 6.7 percent. Even when China’s oil consumption doubled for a third time it was less than half that of the United States. Per capita gasoline consumption in China in the late 2000s was 10 gallons, compared to 459 gallons in the United States.

In 2004, it became the world's second-largest consumer of petroleum products, surpassing Japan.In 2005, China consumed 6.5 million barrels a day, compared to 20.4 million barrels in the United States, 5.5 million barrels in Japan and 2.7 million barrels a day in Germany and Russia. At that time China met 23 percent of its energy needs with oil. In 2006, China's increase in oil demand represented 38 percent of the world total increase in oil demand. In 2010, China consumed about 6 percent of the world’s oil. This figure rose to 13.2 percent in 2021. China's push to use less coal has forced it to turn to oil and natural gas as alternatives.

Huge growth in transportation and plastics production have doubled oil consumption and caused oil imports to increase sixfold in a decade. The increase is a result of industrial growth and an increase in the number of automobiles. In 2010, China had 36 times more cars than it had in 1990 and is expected to have 90 times more by 2030 when it is expected to have more cars than the United States.

In November 2010 a nationwide shortage of diesel caused gas stations to close and long lines to form outside ones that were open. The Longxing Funeral parlor in Chongqing stopped cremations. A dozen or so bodies had to be “put back in the freezer” until enough supplies could secured.

China’s swiftly developing petrochemical sector is bolstering demand for liquefied petroleum gas (LPG) and naphtha. Several propane dehydrogenation (PDH) plants are slated to come online through 2022 and will increase LPG demand. Several steam cracker projects are also under construction and require a combination of naphtha, LPG, and ethane for their fuel supply.18 China's petroleum and other liquids production and consumption, 1993-2019. [Source: U.S. Energy Information Administration country analysis briefs, September 30, 2020]

Demand and Prices for Oil in China

In 2008 China spent 33 times more on crude oil than it did in 1999. Demand for oil has increased at a rate of 24 percent in the late 1990s and early 2000s. The increasing demand for oil has created higher prices and shortages. Higher world oil prices have caused oil prices in China to rise. But at the same time increased demand for oil from China has caused world oil market prices to rise. The slowing of China’s growth beginning in 2008 was one factor that caused the global price oil to fall.

China will nearly double its demand for oil over the next quarter-century, according to the International Energy Agency in Paris. Its demand for natural gas is projected to more than quadruple. Andrew Higgins wrote in the Washington Post, With consumption soaring and the price of imports rising, China is desperate for new sources to boost its proven energy reserves, which for oil now account for just 1.1 percent of the world total — a paltry share for a country that last year consumed 10.4 percent of total world oil production and 20.1 percent of all the energy consumed on the planet, according to the BP Statistical Review of World Energy. [Source: Andrew Higgins, Washington Post, September 17 2011]

China is relaxing controls on fuel prices while oil prices are relatively low and easing curbs on refiners to allow them to set prices and not lose money. In June 2008, after years of keeping gasoline prices artificially low to the point refineries lost money, Beijing raised gasoline prices 16 percent and diesel prices by18 percent due to hikes in the price of oil. It was the first increase in eight months and the sharpest increase ever. The move was somewhat of surprise. Many thought that Beijing would wait until after the Olympics out of concern that higher energy prices might stir up discontent but oil prices of $140 a barrel were simply too high to subsidize. The decision caused global oil prices to drop by $5 and th estocks of top refiner Sinopec to soar.

Gasoline prices in Beijing rose from 91 cents a gallon in 1999 to $2.30 in 2006. Taxi drivers estimate that they have to work an extra hour a day to make ends meet. When oil rices were peaking in 2005 about a forth of the service stations in Guangdong were closed. Many industries that rely on oil have been forced to shut or run at lower-than-desired capacity because there is not enough gasoline and heavy oil to keep the machinery going..

In November 2007, the price of diesel and gasoline was raised by almost 10 percent to tackle the problem of fuel shortages resulting from a lack of refining capacity and the steep rise in oil prices. At that time shortages were so severe that there was rationing, long lines at gas stations and disruption of trucking in key export areas. Commenting on the long waits in gas lines because of chronic fuel shortages in 2007, one Chinese truck driver said, “When a truck driver is not eating rice, he’s eating diesel.”

Although consumption of oil is decreasing in the United States the price is rising because of demand in China and other developing countries.

Oil Production in China

China is the world's fifth largest oil producer. Most of the country’s production comes from legacy fields that require expensive enhanced oil recovery techniques to sustain production. After declining considerably for three years, China’s petroleum and other liquids production reversed course and increased to 4.9 million barrels per day in 2019. Nearly 80 percent of the total liquids production was from crude oil, and the remainder was from conversions of coal and methanol to liquids, biofuels, and refinery processing gains.[Source: U.S. Energy Information Administration country analysis briefs, September 30, 2020]

Crude oil production increased from 102,000 barrels per day in 1960 to 3.3 million per day as of 2002.Since 1993, China has been a net importer of oil. China produced 3.63 million barrels of oil a day in 2005, compared to 2.3 million barrels a day in 1984. Up until the early 2000s, most of the oil that China produced was exported, partly because China had so few motor vehicle and oil exports brought in large amounts of foreign currency.

Domestic oil production peaked in the late 2000s and early 2010s and began to decline after that. While demand for oil rose 6.7 percent a year between 1985 and 2004, domestic oil output only increased an average of 1.8 percent over the same period. Some fields have run dry prematurely because of poor production methods in the past. Some of these have become more productive with the use of better technology. China increased its refining capacity by a third between 2006 and 2010 to around 400 million tons with major oil-processing centers built in Sichuan and Guangxi.

Crude oil: production: 3.773 million barrels per day (2018 est.), seventh in the world.
Refined petroleum products: production: 11.51 million barrels per day (2015 est.), number two in the world.
Refined petroleum products: consumption: 12.47 million barrels per day (2016 est.), number two in the world.[Source: CIA World Factbook, 2022]

Proven Oil reserves (2004 estimate): 24 billion barrels. Enough to last until 2020. Most of China has been thoroughly explored for oil, which means that significant new reserves are unlikely to be found except for offshore.

Oil-Producing Areas of China

China's petroleum reserves are large, of varying quality, and in disparate locations. There are oil deposit blocks in the northwest and offshore tracts believed to be among the world’s largest. Most of China’s proven reserves are in Xinjiang Province in western China. There is also oil east of Beijing and in Heilongong province and off the east coast of China. For a long time the main oil producing centers were the Daqing field in Heilongjiang, which came into production in 1965 and the Liaohe field, located in northeastern China. The 518-square kilometer Ordos Basin which stretches across the provinces of Shaanxi, Shanxi, Gansu, Ningxia and Inner Mongolia is reported to have 60 billion barrels of oil.Changqing is China’s third largest onshore oil deposit. In April 2004, the Chinese government announced the discovery in the Sengi oilfield in northeast China.

China has large potential offshore reserves in Northeast China’s Bo Hai Bay area (thought to have reserves of over 1.5 billion barrels) and the South China Sea, especially in the vicinity of Hainan Island. In December 2004, it was reported that some 20.5 billion tons of oil reserves had been discovered in Bohai Bay. Many promising offshore deposits are in waters claimed by both China and Japan.

At present nearly 85 percent of China's oil production capacity is onshore. The Daqing Field — near Daqing in the Heilongjiang Province in Manchuria — is the oldest oil field in China and for a long time was the biggest. It produced 318 million barrels of crude in 2006. The first oil wells in China were sunk in Daqing in the 1950s, when workers carried 60-ton oil rigs in pieces with their backs and pack animals and roughnecks and engineers that developed the Daqing oil fields slept outdoors in sandstorms and survived on a diet of grapes and melons. The Soviets assisted the Chinese until 1959 and most of the major oil discoveries were made after they left. In 1975 the Daqing area produced 80 percent of China's crude oil. In 2005 it still accounted for a third of China’s production but production levels are falling and other Chinese fields are expected to surpass it soon. Discoveries of new reserves have helped to avert cuts.

According to OilPrice.com: CNOOC has started using China's first domestically designed and produced self-operated large-scale deepwater rig and the world's largest oil and gas storage platform on the coast of Hainan. The company also made a significant discovery in the shallow waters of the Pearl River Mouth Basin.”[Source: OilPrice.com, December 26, 2020]

The are large deposits of oil sands in Xinjiang and Sichuan. The Chinese government and BP/Shell formed a venture to extract oil from oil shale and sand on northeastern Jilin province. The shale oil reserves there are estimated at 300 billion tons. China's efforts to extract shale oil has largely come to nothing.

History of China’s Oil Development

“Before 1949 China imported most of its oil. During the First Five-Year Plan it invested heavily in exploration and welldevelopment . In 1959 vast reserves were discovered in Songhua Jiang-Liao He basin in northeast China. The Daqing oil field in Heilongjiang Province became operational in 1960. Daqing was producing about 2.3 million tons of oil by 1963, and it continued to lead the industry through the 1970s. Further important discoveries, including the major oil fields of Shengli, in Shandong, and Dagang, in Tianjin, enabled China to meet domestic needs and eliminate nearly all imports by the mid-1960s. [Source: Library of Congress, 1987 *]

A rudimentary petroleum-refining industry was established with Soviet aid in the 1950s. In the 1960s and 1970s, this base was modernized and expanded, partially with European and Japanese equipment. In 1986 Chinese refineries were capable of processing about 2.1 million barrels a day. By 1990 China plans to reach 2.5 million barrels a day. See Oil Pipelines Below *

In 1973, despite a steadily growing internal demand for petroleum products, output was large enough to export 1 million tons of crude oil to Japan. Exports increased to 6.6 million tons in 1974 and reached 13.5 millions tons in 1978. In 1985 exports of crude oil amounted to approximately twenty million tons, roughly 16 percent of total production. The majority of 1985 exports were to Japan, but the government also had released increasing quantities on the spot market and sent some to Singapore for refining. Although the government temporarily abandoned its drive to broaden its oil export base in 1986, 131 million tons of crude oil still were produced, an increase of 5.8 million tons over 1985.*

Oil reserves are large and widely dispersed. In general, development is concentrated on deposits readily accessible from major industrial and population centers. Deposits in remote areas such as the Tarim, Junggar, and Qaidam basins, remained largely unexplored in the 1980s. The quality of oil from the major deposits varies considerably. A few deposits, like the Shengli field, produce low-quality oil suitable mainly as fuel. Most of the oil produced in China from the big fields in the north and northeast is heavy, low in sulphur, and has a very high paraffin content, making it difficult and expensive to extract and to refine.*

Offshore exploration and drilling were first undertaken in the early 1970s, and it became more widespread and advanced as the decade progressed. Chinese and foreign oil experts believed that offshore deposits were extensive and could equal onshore reserves. Offshore operations relied heavily on foreign technology. In 1982 thirty-three foreign oil companies submitted bids for offshore drilling rights; twenty-seven eventually signed contracts. By the mid-1980s, when offshore exploration results were disappointing and only a handful of wells were actually producing oil, China began to emphasize onshore development. To continue offshore exploration, China established the China National Offshore Oil Corporation to assist foreign oil companies in exploring, developing, extracting, and marketing China's oil.Exploration and drilling was concentrated in areas in the South China Sea, Gulf of Tonkin, and Zhu Jiang (Pearl River) Mouth Basin in the south, and Bo Hai Bay in the north. Disputes between China and several neighboring countries complicated the future of oil development in several promising offshore locations.*

Oil in Xinjiang

The oil fields in the Tarim Basin and Taklimakan desert in Xinjiang Province are among of the world's largest, most remote and expensive to develop. By some estimates they contain at least 74 billion barrels of oil — three times the proven reserves of the U.S. and one third of the proven reserves of Saudi Arabia. To get to the fields Chinese trucks are transported across the dunes by huge American-built trucks with colossal tires on roads made with sand-stabilizing plastic and tons of gravel brought in by yet more trucks. Reeds planted in nets are used to keep the dunes from covering the road.

Much of the oil lies in fields around Koral, in north-central Xinjiang, a so-called “instantaneous city” that has sprung up over night and filled with trading companies, shopping malls, a large nightclub district, a new airport and a population largely made up of Han Chinese hoping to seek their fortune. Between the mid 1990s and mid 2000s Koral grew from 100,000 residents to 420,000 residents and is growing by 20 people a year. Most of the jobs are going to Han Chinese not local Uighurs and Kazakhs.

Many are skeptical about the oil and gas potential of the region. Claims that the Taklamakan Desert and Tarim Basin contains as much oil as the United States appear to be overstated. Many of the deposits are more than 5,000 meters below the surface and are very expensive to harvest.

Several hundred successful wells have been sunk at Tarim No. 4 Field, where workers labor every day in temperatures that reach 104̊F in the summer and drop to -22̊F in the winter. A worker at the field told National Geographic, "There are sandstorms. You can't see farther than one meter. Then the cars stop, and the exploration stops. But the drilling always goes on." The oil men here refer to themselves as China's "soldiers of oil."

In December 2004, it was reported that more than 20 billion tons of oil had been found in Xinjiang’s Tarim Basin. More than 60 companies from 16 countries shave expressed interest in developing oil in the Tarim basin. In December 1993, Exxon and a Japanese-Indonesian venture won the right to explore the first block. Texaco, Japan petroleum and Elf Aquitaine won the right to search in the second block.

Private Oil Wells in China

Near the city of Jiangbian in Shaanxi Province in the southern Gobi desert, a number of ordinary people, including farmers and truck drivers, borrowed all the money they could from friends and relatives, and drilled their own private wells on land their families had occupied for generations. The move was made possible in 1994 when the oil ministry and the oil company PetroChina allowed private citizens to prospect and drill their own wells in a 1,100-square-kilometer, 417-square-mile, area of Shaanxi

In many cases the oil wells were placed in corn fields and the oil was sold to a local refinery. One trucker who sunk $84,000 of his, his family’s and friend’ money in a 685 meter deep well told the New York Times the moment of truth came when he activated his derrick and sat by it all night worrying that his investment was for nothing. After the oil began to flow, at a rate of 21 tons a day, he said. “I screamed, I washed my hands on the oil, and I drank all night, but I couldn’t get drunk. I was too happy.”

In the early 2003, local government officials began claiming thousands of the private wells in the Jiangbian area for themselves, paying their owners only a small faction of their value, in many cases much less than what the well owners spent setting up their operations. The local government rescinded the private prospecting rights without telling the owners. In some cases local government officials encouraged people to drill for more oil and when they found it the official seized the well.

Owners of the seized private wells filed a class action against the local government. It was the largest suit ever brought against a Chinese government and it received a lot of media attention. Those that had their wells taken away cited new government laws on private property adopted in 2003 and rules that allowed citizens to sue the government adopted in 1990.

Authorities invoked laws against public gatherings and disturbing public order. Private well owners were detained. Their primary lawyer, Zhu Jiuhu, was arrested. Feng Bingxian, a businesswoman who led a group of investors that had protested the seizure of the wells, was sentenced to three years in prison for disturbing social order. Others were convicted on similar charges.

Efforts to Increase Domestic Oil Production in China

In response to China’s growing use of imported crude oil, the government called for the national oil companies (NOCs) to raise domestic oil production levels in 2018. The oil price recovery starting in 2016 also made developing China’s technically challenging fields profitable. These factors prompted the three major NOCs to increase joint upstream investment by 30 percent in 2018 and 23 percent in 2019. However, China’s NOCs have indicated that they will reduce overall capital expenditures in 2020. [Source: U.S. Energy Information Administration country analysis briefs, September 30, 2020]

Low oil prices pose a significant downside risk to the NOCs upstream investments and the country’s oil production levels.. Domestic crude oil production from many mature fields and technically challenging new developments, especially those involving onshore tight oil plays, is cost prohibitive at low oil prices and will likely decline during the next two years.

To attract more investment and technical expertise and make China’s upstream sector more competitive, the government plans to ease restrictions on foreign and private investment in China’s conventional oil and natural gas upstream sectors starting in May 2020. Previously, foreign firms could not own a majority stake in a project and were required to be part of a joint venture with one of the NOCs to develop China’s oil and natural gas fields. Foreign firms and domestic independent companies that hold net assets of $43 million can participate in exploration and development of Chinese reserves. This initiative could boost crude oil production in more technically challenging fields in the longer term, although declines in mature basins will likely continue offsetting new production.

Petroleum Refining and Storage in China

China steadily expanded its oil refining capacity during the 2010s and early 2020s to meet its strong demand growth and to process a wider range of crude oil types. China’s installed crude oil refining capacity reached about 17 million barrels per day at the end of 2019 and ranks second behind the United States’ capacity globally. China’s independent refiners are called “teapots.” They have helped raised China's crude processing capacity to 75 percent in 2020 compared with 60 percent in 2019. [Source: U.S. Energy Information Administration country analysis briefs, September 30, 2020]

The new capacity that began coming online in 2019 is from the first large integrated refinery complexes that are linked to petrochemical facilities. These refineries are primarily intended to produce naphtha for the petrochemical plants. The 400,000 barrels per day Hengli refinery began operations in mid-2019, and Zhejiang’s Rongsheng facility, with 400,000 barrels per day of capacity, brought online all of the first phase units by the end of 2019. Sinopec and Kuwait Petroleum are constructing a 200,000 barrels per day integrated refinery in Zhanjiang, coming online by 2021. A second phase of Zhejiang’s Rongsheng plant and the 320,000 barrels per day Shenghong Petrochemical refinery are slated to be online by the mid-2020s, and several other large refineries are in various stages of planning. In 2020, China announced plans to build a $20 billion refinery and petrochemical project in Shandong province according to Reuters. The 400,000 barrel-per-day refinery and 3 million tonne-per-year ethylene plant is slated for Yantai. [Source: Shivdeep Dhaliwal, Benzinga, June 2, 2020]

Even though China releases limited information on its crude oil inventories and stockbuilding progress, industry analysts assess that Beijing has been swiftly filling its strategic petroleum reserves (SPR) since 2016. Industry trade press estimates that China has more than 300 million barrels of crude oil stored in at least 12 SPR facilities. In addition, China has a sizeable amount of commercial storage capacity that houses some of the country’s strategic reserves, which industry analysts estimated up to 600 million barrels in 2019.

In September 2019, China announced that the country had 80 days of crude oil inventories to cover its imports, which is close to China’s goal for its SPR program of 90 days of import cover. Despite closing the gap on its target inventories, China has plans to begin building the third phase of its SPR program in the next few years. Industry analysts suggest that China continued to build its oil storage reserves through the first half of 2020 to take advantage of the low international oil prices. Crude oil imports remained higher than the levels from the previous year while oil demand declined significantly.

Domestic Oil Pipelines in China

Pipelines: 30,400 kilometers crude oil, 27,700 kilometers refined petroleum products (2018). [Source: CIA World Factbook, 2022]

China had 15,256 kilometers (9,479 miles) of pipelines for oil and 6,106 kilometers (3,794 miles) of pipelines for refined products as of 2005. It planned to lay 150,000 kilometers (93,206 miles ) of oil and gas pipelines between 2008 and 2020 to make sure energy supplies get to where they are needed.

In the 1970s, China constructed oil pipelines and improved ports handling oil tankers. The first oil pipeline was laid from Daqing to the port of Qinhuangdao; 1,150 kilometers long, it became operational in 1974. The following year the pipeline was extended to Beijing; a second line connected Daqing to the port of Luda and branched off to the Democratic People's Republic of Korea (North Korea). A pipeline from Linyi in Shandong Province to Nanjing was completed in 1978, linking the oil fields of Shengli and Huabei to ports and refineries of the lower Chang Jiang region. In 1986 plans had been made to construct a 105-kilometer pipeline linking an offshore well with the Chinese mainland via Hainan Islands. [Source: Library of Congress, 1987]

Ürümqi–Lanzhou pipeline runs from Dushanzi District, Karamay, Xinjiang to Ürümqi, Xinjiang. It plays get oil out of the production areas of Xinjiang to where it can be distributed to the rest of China. The Lanzhou–Chengdu Pipeline connects to the Ürümqi–Lanzhou pipeline and transports crude oil produced in Xinjiang and imported oil from Kazakhstan to southwestern China. Owned by China National Petroleum Corporation, it supplies petroleum to the Pengzhou refinery among others.

The 2,070-kilometer (1,290 mile) Lanzhou–Zhengzhou–Changsha product oil pipeline carries diesel and other oil products from the northwest to the central regions of China. The pipeline starts in Lanzhou in Gansu, and runs through Zhengzhou in Henan to Changsha in Hunan. In Zhengzhou, it is linked with Jinzhou–Zhengzhou product pipeline running from Jinzhou in Liaoning to Zhengzhou.

The 1,250-kilometere (777 mile) Lanzhou–Chengdu–Chongqing starts at the Lanzhou terminal and finish at the Chongqing terminal. It runs through Gansu, Shaanxi and Sichuan provinces.This pipeline has capacity over 6 million tonnes of oil products per year and cost around US$500 million to build.

Oil Pipelines and Trains That Bring Oil Imports to China

The Chinese government has provided a lot of money to build pipelines between China and oil- and natural gas-rich Central Asia. The Kazakhstan-China pipeline is being built in three stages. One of the most difficult obstacles was building the section over the Tien Shan mountains. Pipelines in Kazakhstan can also be used to transport oil in Siberia to China.

Sino-Myanmar pipelines refers to the oil and natural gas pipelines linking Myanmar's deep-water port of Kyaukphyu (Sittwe) in the Bay of Bengal with Kunming in Yunnan province of China.

The Atasu–Alashankou oil pipeline is 970-kilometer 600-mile pipeline between Xinjiang Province western China and Kazakhstan. Begun in September 2004, it was completed between eastern Kazakhstan and in China in late 2005 partly using the Russian networks or pipelines and opened in 2006. . Boasting a a capacity of 20 million tons per year. it carries oil from the Caspian Sea in Kazakhstan to the Chinese border, where it connect with the pipeline to China’s east coast. It is the first stage of the Kazakhstan-China pipeline.

A Chinese-Kazakhstan consortium built the $3.5 billionoil pipeline between Atyrau near the Caspian Sea in western Kazakhstan to Alashankou in western China, where it will connect with the pipeline to China’s east coast, for a total length of 2,900 kilometers (1,860 miles). The pipeline initially had a capacity of 400,000 barrels a day but can now can carry 800,000 barrels a day.

Much of the oil from Russia arrives by train via the Trans Siberian Railroad. After awarding Siberian pipeline to Japan rather than China, Russia promised to increase its oil shipments by rail to 300,000 barrels a day.

Oil Accidents and Spills in China

In 2005, 60 people died in 161 accidents in petroleum and petrochemicals operation, 29 percent more than in 2004.

China's worst reported oil spill occurred in July 2010, when two massive pipeline at Dalian, a busy northeastern port, exploded and oil poured into the sea, spreading over at least 165 square miles (430 square kilometres). The explosion produced a massive fire that burned for 15 hours. Two weeks after the explosion scars of the fire could still be seen on massive storage silos, covered in black soot. Five days afterwards Greenepeace estimated the oil had spread over 165 square miles (430 square kilometers) of water five days since

A deadly accident occurred in Qingdao in 1989, Caixin magazine reported. A series of explosions took place in Huangdao district when one of five oil tanks was hit by lightning.

Pipeline Explosions in China Kill 55

In November 2013, two explosions at a Sinopece-run oil pipeline in the eastern China port city of Qingdao in Shangong province killed 55 people and injured 136. . The Wall Street Journal reported: “Petroleum from the pipeline has contaminated some 3,000 square meters of water and 18,000 people have had to be evacuated. Photographs posted online showed roads reduced to rubble, vehicles flipped one their sides and windows shattered in nearby residential buildings. [Source: Josh Chin, Wall Street Journal, November 24, 2013]

“The first explosion occurred in the Huangdao district of the city of Qingdao as workers were trying to fix the pipeline, which had begun leaking, causing oil to spill into the city's drainage pipe system. According to local authorities, a separate explosion occurred at roughly the same time after petroleum leaked into a nearby estuary. Six of those killed were firefighters affiliated with a Sinopec oil depot in Huangdao,

“Sinopec, which is China's largest oil refiner, has previously faced protests and other complaints from residents in other cities over its efforts to build oil refineries and other petrochemical plants near densely populated area. The damaged pipeline, which connects oil depots in Huangdao with processing facilities in the city of Weifang roughly 170 kilometers away, can ship about 200,000 barrels a day. It was built in 1986 and stretches about 250 kilometers in total.

“The pipeline hasn't been immune to problems. In 2010, for example, company statements describe two accidents along the pipeline due to the buildup of trash on a section of the pipeline and illegal construction near it, according to company statements. Although the accidents involved oil spills and fires, no casualties were reported, according to company statements. Sinopec said at the time that it spent about $2 million between 2005 and 2010 to fix sections of the pipeline that had severe corrosion.

Human errors and poor planning of oil and sewer pipes, and negligence after the leak led to deadly Qingdao explosion in November 2013 , work safety investigators said. Seven Sinopec employees and two Qingdao city workers were detained. Yang Dongliang, director of the State Administration of Work Safety, said that said the pipeline’s layout was unreasonable and safety management was lax: "The serious damage in this incident has highlighted major problems, including the location of the pipelines and the sewerage grid and the negligent maintenance of the oil pipeline that caused the oil leak,'' Yang said. "There was an inadequate response after the leak was found. They did not seal off the area and evacuate people. This is a serious lapse of responsibility,.'. [Source: South China Morning Post, November 26, 2013]

Image Sources: University of Washington; Landsberger Posters http://www.iisg.nl/~landsberger/

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated June 2022

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