By The Australian Financial Press The US oil and gas boom is helping China grow its energy sector and boost its economy, according to a new report by the Australian National University.
The report, titled China’s Oil Boom, Explains Why We Need It: The Energy Picture, says the boom in the world’s second-biggest economy has created a demand for energy that will only grow as China and India become the largest economies in the region.
China is the world leader in natural gas and is rapidly becoming the largest exporter of liquefied natural gas, or LNG, and the world lead in renewable energy.
“It is now a global market, with LNG being used to produce a staggering amount of energy for China and many other countries,” Professor Brian Woodford said.
While some analysts see this as a boon to China’s economy, it is not the only reason for its energy boom.
Analysts also attribute the boom to a combination of high oil prices, a strong Chinese military, a growing middle class, and China’s ambitious energy policy.
One of the biggest drivers of China’s energy boom is the huge boom in natural-gas extraction and consumption, the report says.
Key findings: China’s oil production has doubled in the last three years, and now accounts for more than half of the country’s energy consumption, compared with just over a third a decade ago.
That growth has driven a dramatic rise in China’s GDP, and has brought the country into the global elite, with its middle class now more than three times larger than it was in 2007.
There are now more jobs in China than anywhere else in the developed world, and they are largely made up of people in the energy sector.
This trend is being seen in all parts of the economy.
And China is the second-largest oil producer in the Western Hemisphere, behind only Venezuela.
It is also the second largest natural gas exporter, after Russia.
With its economy growing by 5 per cent a year, China is expected to overtake the US as the world largest economy in five years.
As China’s growth accelerates, so does the countrys energy demand, the study says.
“China’s rapid rise is also expected to accelerate the expansion of its domestic LNG industry, which could eventually provide an additional source of income for China, which will increase its ability to finance its massive infrastructure investment programs.”
It said China’s LNG exports are expected to triple by 2032, from 2.7 million tonnes a year to 5.3 million tonnes.
Meanwhile, China has doubled the number of new nuclear power plants, with more than 200 operating.
At the same time, China’s state-owned power utility, China National Nuclear Corporation, plans to open a new nuclear reactor in the eastern province of Henan, which it says could be capable of generating power for up to 40,000 homes.
A major challenge for China’s expansion will be keeping up with demand from other major energy players, especially the US.
But the report said there were signs that China could soon become a global leader in renewable power generation.
Researchers from the university’s Department of Energy Resources Economics and Policy said that while China’s recent boom is “a good sign for renewables”, it was also possible the boom would slow down as China develops its energy infrastructure.
Dr Woodford is also sceptical of the argument that renewable energy will provide the solution to Chinas energy crisis.
For example, he said China would need a large number of solar panels on its roofs before the power grid could meet its energy needs, and it could not provide that quickly without relying on fossil fuels.
Instead, China should focus on renewable energy development and investment in its own infrastructure, Dr Woodford added.
Australia’s oil and natural gas industry has grown to $2.2 trillion over the past 10 years, according a report from the International Energy Agency, with the industry now responsible for 80 per cent of Australia’s energy needs.
Its share of total global electricity generation has doubled since 2009, according the report.
However, its role in global energy markets has been limited.
Currently, the bulk of its market is in the Asia-Pacific region.
China’s economic growth has led it to become the world leaders in the construction of new power stations, with almost 90 per cent owned by foreign companies.
Energy companies in Australia have been able to sell electricity to Chinese consumers, as well as foreign customers, at prices below those in the US and other major economies.
Even if China’s massive expansion of natural gas is not enough to fill the market, it could help push down prices in the country, said Dr Woodfield.
He said the oil and mineral exploration boom is also having an impact on energy prices.
Oil and gas drilling is currently costing Australia $1.7