The History of Oil and Gas in China - Essay Example

The History of Oil and Gas in China Introduction Being a civilization state, China's petroleum industry is convincingly influenced by the increasing population and political system of the country. Likewise, its dearth of natural gas and oil reserves affected so much need to import petroleum products from other countries. It underscores the existing governmental system, its diplomatic association with neighboring nations, and the actions they are taking to inspire positive image in the international community. With a mounting population of more than 1.3 billion people, China depends greatly on other countries for prime resources, for example, oil and gas. In order to enhance its association with other Southeast Asian nations, China always considers diplomatic action over military intervention, especially in regards to disputed territories like the Scarborough Shoal in South China Sea. China is frequently involved in a political clash with Malaysia; perhaps, it is due mainly to the two countries' diplomatic dissimilarities. Nevertheless, China's ties with Malaysia are interdependent in that China relies on the huge oil and gas resources of Malaysia in return of China's defense policy and assurance for Malaysia. At the present, Malaysia is the largest producer of petroleum products in the Southeast Asian region, constituting more than fifty [Student’s Last Name] 2 percent of the oil and gas production in area (Global Security, "South China Sea and Natural Gas"). Ironically with China, while it possesses significant deposits of oil and gas reserves, they do not substantially account to the world’s aggregate oil supply; its natural gas reserves is merely one over twenty of the world’s oil and gas reserves (Li and Du 1). Furthermore, being the second largest energy user in the world, and considering its growing population, the demand for higher energy supply is expected. History China was the first country to discover the presence of oil accumulations in salt wells (American Petroleum Institute, "All about Petroleum - As Old as History"). The Chinese identified beforehand the significance and the possible use of oil and gas in boundless applications. Early on in history, about 500 B.C., consistent with some historical accounts about China, the old Chinese express about wells with depth of 100 feet holding significant volume of water and natural gas. Also, the Chinese were pioneers in conceptualizing the use of bamboos to serve as pipelines to draw natural gas and oil from wells. These recovered gas and oil were originally used for lighting (Business Reference Services, "History of Oil and Gas Industry"). In addition, the Chinese eventually ventured in searching and excavating wells with depths of over 2000 feet (American Petroleum Institute, "All about Petroleum - As Old as History"). While China was the first country to venture in the exploration and excavation of oil and natural gas reserves, it was not the first country to take innovative approaches in developing petroleum products like kerosene, gasoline, etc. It commenced to adapt a modernistic method in developing oil and gas products only during the 1950s. Even up to the present, China is comparatively [Student’s Last Name] 3 fresher in modern oil and gas discovery and production compared to the US. Initially, China was an oil importer but later managed to become independent; and even became an exporter between 1965 and 1993; however, it went back to being an importer in 1993 (Li and Du 1). At first, China imported oil products such as Kerosene in 1863; and in 1949, the country independently produced crude oil; nonetheless, China’s need for oil exports from other countries was never eradicated until after the discovery of the enormous Daqing oil ground in the 1960s that made China ultimately oil-independent (1). Eventually, from being an oil importer, China turned out to be an oil exporter. In fact, between 1978 and 1985, the country traded 80% of its internally produced oil products. The largest part of these oil products were shipped to Japan (1). Going back, in 1959, more oil fields were discovered and drilled. One of which is the Songhua Jing-Liao He sink in the northeastern portion of China. Huge oil and natural gas accumulations were discovered in the area. Also, in 1963, the gigantic Daqing oil ground was making "2.3 million tons of oil by 1963" (Library of Congress Country Studies, "China Oil and Natural Gas").Subsequently, many other important oil fields were discovered, particularly those in the provinces of Shandong and Tianjin, which allowed the country to provide more than enough oil and gas supply for its constituents; and it aided in the total riddance of oil importation in the 1960s. Furthermore, 13 years later, notwithstanding the progressively increasing demand for oil and gas domestically, the country's oil production was so huge that it was yet able to trade a million tons of crude oil to Japan; these oil exports enlarged as the years went on: "6.6 million tons in 1974... 13.5 million tons in 1978" (Library of Congress Country Studies, "China Oil and Natural Gas").Aside from Japan, which benefited much of the oil exports from China, the [Student’s Last Name] 4 country also exported considerable amount of petroleum products to Singapore, partly for product improvement. "Offshore exploration and drilling were first undertaken in the early 1970s" (Library of Congress Country Studies, "China Oil and Natural Gas"); this is thought to be the focal point of China's aggressive mind in indulging in offshore discoveries and exploration, which somehow triggered conflicts between China and some neighboring states including the Philippines and Japan (New York Times, “China's Territorial Disputes”). China's search for oil reserves and drilling operations has immensely developed over time, although it did not surpass that of the United States. It has also become prevalent. The reason behind these offshore explorations is the Chinese leaders' belief that there are more oil reserves offshore; although, this activity counted greatly on high technology from other countries.In the middle of 1980s, after China decided to indulge in offshore drilling, which turned out to be unsatisfactory considering that there were only few wells discovered and drilled, which were way less oil production than the leaders expected, China went back to onshore exploration (Library of Congress Country Studies, "China Oil and Natural Gas"). In China, natural gas was comparatively a secondary source of energy. Production increased swiftly between the 1960s and 1970s though. Productivity was roughly "12 billion cubic meters - about 3 percent of China's primary energy supply” in 1985; consequently, natural gas production increased by 1 million cubic meters. China's natural gas supply and yearly output was generated mostly from Sichuan province. Majority of the outstanding natural gas is generated at the Daqing and Shengli oil grounds. Aside from Daqing and Shengli, other natural gas-gas producing [Student’s Last Name] 5 regions were the Jiangsu, Shanghai, Zhejiang, and the Hebei and Liaoning provinces (Library of Congress Country Studies, "China Oil and Natural Gas").The extent of China's natural gas reserves was indefinite. However, it was approximated to be between "129 billion to 24.4 trillion cubic meters" (Library of Congress Country Studies, “China Oil and Natural Gas”). But there are other locations that the Chinese are hopeful about to contain huge amount of oil and natural gas deposits, for example, the Zhongyuan Basin, which is bordered along the provinces of Henan and Shandong. Also, there are key offshore oil and natural gas accumulations discovered. According to the Chinese leaders, if these resources are extracted and converted into petroleum products, this could hopefully augment gas production by half or fifty percent. The biggest untouched natural gas reserves are deemed to be within the Qinghai and Xinjiang areas. Major developments were undertaken by China years after. A basic petroleum-refining industry was founded with the assistance of the Soviet Union in the 1950s (Library of Congress Country Studies, "China Oil and Natural Gas"). Eventually, this facility has been modernized with the addition of European and Japanese technologies. Chinese refining plants were already able to produce more than 2 million barrels of petroleum products every day; it was later increased to two and a half barrels per day in the 1990s. China’s oil and gas history was a little erratic initially; nevertheless, the country managed to produce domestically-refined petroleum products that do not only meet the country’s demand for oil and gas but enabled the country to ship petroleum products to other countries. However, there are questions the still need to be answered: What would be the future of China’s oil and gas industry? If every well and oil reserve are already exhausted, what then is next for China? Works Cited All About Petroleum - As Old as History. American Petroleum Institute, n.d. Web. 24 November 2012. "China Oil and Natural Gas." loc. Library of Congress Country Studies, 1987.Web. 24 November 2012. "China's Territorial Disputes."New York Times.New York Times, 20 November 2012. Web. 24 November 2012. History of Oil and Gas Industry.Business Reference Services of the Library of Congress, n.d. Web. 24 November 2012. Li, Dacun, and Yuqi Du. "The History and Future of China Oil and Gas."Society of Petroleum Engineers.SPE Annual Technical Conference and Exhibition, Houston, TX. 26-29 September 2004. Keynote Address. "South China Sea and Natural Gas." globalsecurity.Global Security, 2008.Web. 24 November 2012. Read More