PRC ENERGY STRATEGY
Key Takeaway
- The PRC’s interest in ensuring reliable, cost-effective, and diverse hydrocarbon sources to support its economic growth drives its overseas energy investments.
In 2022, the PRC imported approximately 10.2 million barrels per day of crude oil, which met about 70 percent of its needs, and produced the other 30 percent domestically, according to industry reports. The PRC continues to build its crude oil emergency petroleum reserve (EPR) capacity to safeguard against supply disruptions with a goal to have the equivalent of 90 days’ worth of oil imports in storage. The PRC’s EPR storage capacity is approximately 600 million barrels, equal to about 60 days’ worth of oil imports, according to industry data. The PRC met about 41 percent of its natural gas demand with imports in 2022, and industry experts estimate that the PRC’s natural gas imports will increase to about 50 percent by 2035. In 2022, most of China’s oil and natural gas imports came from Africa, Central Asia, the Persian Gulf, and Russia. China’s investments in transport networks for oil and gas could help diversify its supply and reduce dependency on strategic chokepoints such as the Strait of Malacca.
The PRC relies on maritime routes that transit the SCS and Strait of Malacca for most of its hydrocarbon deliveries. Approximately 62 percent of the PRC’s oil imports and 17 percent of its total natural gas imports transit the SCS and Strait of Malacca. Despite the PRC’s efforts to diversify energy suppliers, Beijing will most likely continue to rely on oil and natural gas imports from Africa and the Middle East to meet energy demands for at least the next 10 years.
Crude oil pipelines from Russia and Kazakhstan to China demonstrate the PRC’s interest in increasing overland fuel supply. In 2022, the PRC imported about 600,000 barrels per day of Russian crude oil via the East Siberia–Pacific Ocean pipeline, which has a total designed capacity of 1.6 million barrels per day. The PRC also imports crude oil from Middle Eastern—primarily Saudi—and African suppliers via a crude oil pipeline across Burma. This 440,000-barrels-per-day pipeline bypasses the Strait of Malacca by transporting crude oil from Kyaukpyu, Burma, to Yunnan Province, China, and reduces shipping time by more than a third. This pipeline, however, still relies on seaborne oil imports through the Indian Ocean, where the PRC has little power projection capability.
In 2022, approximately 30 percent of the PRC’s natural gas imports came from Turkmenistan via a pipeline that runs through Kazakhstan and Uzbekistan. This pipeline can transport 55 billion cubic meters per year; Turkmenistan and China are planning to expand it to 85 billion cubic meters per year. A natural gas pipeline connecting China to Burma can deliver 12 billion cubic meters per year, but only 4 billion cubic meters of gas was shipped in 2022. Russia’s Power of Siberia gas pipeline supplied approximately 15 billion cubic meters to China in 2022. The pipeline is projected to reach an annual capacity of 38 billion cubic meters per year by 2027.
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OFFICE OF THE SECRETARY OF DEFENSE
Annual Report to Congress: Military and Security Developments Involving the People's Republic of China
