China has vast untapped energy reserves but needs the expertise and investment to locate them, state press said yesterday even as the country expands its search for energy overseas.
Zhang Hongtao, deputy director of the China Geological Survey, an institute with the Ministry of Land and Resources, said thorough geological surveys have only been conducted over a small part of China's territory, the China Daily reported.
"Major findings are expected soon," Zhang was quoted as saying, without elaborating, while at an East Asian regional investment forum in China's Shandong Province.
"We are very hopeful China will overcome the energy bottleneck [it faces] by tapping its own mineral resources," he said.
"I believe China is still a nation with plenty of options. We have reason to be confident of finding new resources," he said.
The comments come as China faces strong opposition in the US over its state-owned China National Offshore Oil Corp's (CNOOC) aggressive US$18.5 billion bid for US oil company Unocal.
RAPID DEVELOPMENT
China's rapid economic development has increased its dependency on oil, catapulting it to a net importer as well as the world's second-largest consumer after the US.
China's oil imports last year jumped 35 percent as flagging domestic production failed to keep up with booming domestic demand.
The government is convinced China has rich untapped oil deposits, such as in Xinjiang Province, but has yet to extract much of the resources largely because of geographical difficulties, lack of investment and insufficient know-how and technology.
If CNOOC succeeds in buying Unocal, China would gain access to technology to dig far deeper underground than it can now, a US lawmaker has said.
Analysts yesterday said that China may have large untapped resources, including oil and natural gas, but the problem is that it may not be economically worthwhile to try to extract them.
"It's a matter of money, a lot of money," said Howard Wong, an oil analyst for Morgan Stanley in Hong Kong.
China's natural gas and oil resources are located in the wrong places.
Most of China's known natural-gas reserves are in the Tarim Basin in Xinjiang Province.
TRANSFER COST
To transfer the gas from the under-developed Xinjiang region to the rapidly developing eastern coastal provinces where it is needed, China will have to spend billions of dollars to build pipelines.
It has built a nearly 4,000km, US$5 billion west-to-east gas pipeline from the Tarim Basin to its energy-hungry eastern provinces, but several more pipelines are needed to meet the demand, Wong said.
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