Syed Rashid Husain WITH changing global energy landscape, rising output in North America and the growing Chinese appetite and thirst for energy resources, the energy world is faced with major changes and new challenges. Global energy geopolitics is undergoing a major metamorphosis too, with new alignments and realignments in process. Attention is definitely focused – in more than one ways – on Beijing, the emerging superstar on the global energy horizon. Global energy analysts and pundits have been highlighting this growing role of China in the emerging energy equation for some time now. But it is indeed rare to hear the Chinese viewpoint on this changing global energy landscape. And in this backdrop, when the Riyadh-based International Energy Forum (IEF) announced a talk on the Chinese perspective on energy by Dr. Jing Lu, Council member and Senior Research Fellow Center for Contemporary World Studies, it was worth making the dash to Riyadh from Dhahran. China is the global manufacturing house; good friend Yao Yu of the Chinese embassy in Riyadh has been insisting for some time now. His assertion has been that the galloping Chinese consumption does not cater to the needs of the Chinese population only. Much of it is required to meet the growing industrial requirements of this global manufacturing house. And indeed Dr. Yu carries a point, one can't deny. The growing Chinese industrial output, directed at virtually all destinations in the world, gives a fillip to the growing Chinese thirst for energy, one has to concede and admit. In his presentation at the IEFS in Riyadh last Monday, Dr. Lu had a clear message to deliver – the growing Chinese energy needs is bound to energize the crude bond between Beijing and Riyadh. With the Chinese energy mix undergoing a massive change, the emerging crude bond between the Gulf and Beijing is getting significant. Coal today enjoys a significant 67 percent stake in the current Chinese energy mix, yet now it is in for a massive change. The emphasis on crude oil in the overall Chinese energy mix is bound to grow significantly, Dr. Lu asserted, signifying the need for closer, strategic relations with oil and gas exporters in the years to come. In 2012 Chinese crude oil imports stood at 271 million tons. However, the need is growing fast. As per the available projections, the total Chinese crude consumption is to touch 585 million tons by 2015 and 738 million tons by 2020. And in order to meet these galloping needs, Beijing will need to import 385 million tons of crude in 2015. The imports are projected to go up further to 538 million tons by 2020. How would Beijing meet this rapidly growing crude needs and from where, remains a major strategic issue before the Chinese leadership. And China is faced with some major issues and challenges, in meetings its energy needs. Chinese major suppliers are located in politically and economically turbulent regions, posing threat to its overall energy supply chain, Dr. Lu was candid. In addition, China is dependent on marine transport and this increasingly requires muscle and the ability to escort the shipments safely too, so as to ensure stable supply chain. The emerging risk to Iranian crude exports and the complementary geopolitical threat to crude shipments through the narrow Straits of Hormuz and the Straits of Malacca also represent potential challenges to stable crude supplies to China. Beijing is not only aware of these, but is also taking steps to overcome these. The recent agreement with Pakistan on Gwadar port also manifests the Chinese desire to develop alternate routes, ensuring stable supplies of crude, conceded Dr. Lu and his team before the audience at the IEF headquarters. And then the major issue before the Chinese leadership remains; from where to meet its galloping energy needs? Eyes are indeed focused on energy rich Gulf. The region is to remain a major source of energy resources to China in the years and decades to come. With Saudi Arabia occupying the number one slot – exporting some 54 million tons of crude oil to China last year – almost 42 percent of Chinese oil imports were from Middle East in 2012. This tightening crude glue between Beijing and this region is a win-win relationship, Dr. Lu asserted. China is seeking sustainable and diversified energy supply sources while the energy rich Middle East is looking for stable and growing markets for their energy riches. On a strategic level, the energy rich Middle East and China thus complement each other significantly, he underlined. And this is manifested in more than one ways. Consequent to this emerging crude bond between the Gulf and China, its business relationship with the Gulf is also bound to grow manifold in the near future. The historical Silk Road linked China to the region in past. Based on energy and trade, China is now endeavoring to re-establish a new Silk Road with the region. Already in 2009, China replaced the United States as the top trading partner of the Middle East. And the relationship continues to grow and flourish. Capital flow between China and the GCC that stood at $15 billion in 2012 is now projected to touch a whooping $300 billion mark by 2020. And in the meantime, the bilateral trade between China and Middle East has jumped to 190 billion in 2011 from a meager 36.4 billion in 2004. While giving out details of the Chinese energy horizon, Dr. Jing Lu delineated in his hour-long presentation that China has embarked upon a new energy revolution. The Chinese 12th Five-year energy plan is targeting to reduce PM2.5 emission in 2015 by more than 30% as compared to 2010. As per the plan, the total energy consumption 2015 is to be kept within 4 billion standard coal units and 6.15 trillion kw-hr. From energy mix perspective too, China today represents a very interesting scenario. Thirty new nuclear power stations are under construction in the country, bringing the total number up to 42, the audience was told. Already by 2012, the Chinese nuclear output was 98.2 billion kw-hour, making it the third largest source of electricity, behind thermal and hydropower. Wind power was already contributing 0.1 trillion kw-hour in 2012 to the total energy mix of China. China's growing stake on the global energy stage is more than evident, becoming more and more pronounced with each passing day. A crude bond between China and the energy-rich Gulf has come into being. Gulf and China are today complementing each other in very significant ways, one cannot at all deny.
