Research reports on Chinese industries

The International Energy Agency (IEA), an oil & gas industry icon and energy advisor to many of the world's key countries, reports that China has indeed become the world's largest energy consumer, well ahead of expectations. China has been quick to deny this. While controversy swirls on this monumental change in world order other statistics maintain the status quo.

Its finally happened! And a good five (5) years ahead of industry predictions at that. China is the top energy consumer in the world, toppling the USA's often dubious distinction for this crown since the early 1900's. Or is it? Not so fast says the world's fastest growing economy, as it quickly refuted this western claim.

The controversy appears to hinge on how the IEA has arrived at its benchmark decree. China states the IEA have not accurately compiled their data. Oft times the devil is in the details. In justifying their position, China points to the fact that the IEA uses a different data compilation approach, thereby creating erroneous results.

The IEA in its report states that China consumed 2.252 billion tons of oil equivalent in 2009 compared to the USA's 2.170 billion tons for the same period. A point of contention may well rest with the definition of "oil equivalent" in relation to consumption, as it includes a melting pot of energy sources including crude, nat gas, coal, nuclear power and renewable resources.

Additionally, it is well understood throughout the industry that transparency issues prevail in China. They are known to be rather selective about what and how much information they allow into the public domain. It is therefore certainly not implausible that China may have more complete and accurate information and that the IEA had to do some challenging and perhaps assumptive filling of voids and connecting of the dots in arriving at their conclusions. Western heavy hitters like the USA on the other hand are readily perceived to be far more open, honest, and forthcoming with their data. Its not a big stretch to think that China may have been a little stingy and/or creative in their provision of data for the world to review and critique. Not that earth shattering, since its not that big of a stretch to think that democratic western countries haven't ever done a bit of the same from time to time.

What we're left with then is that timeless concern in relationship to data. Accuracy of a conclusion is proportionate to the accuracy and completeness of the data being used in combination with the way it is compiled. Here's the short version according to some: %^&* in, %^&* out.

What is not being contested though are other very interesting tidbits of information that may arguably be just as important as who is king of energy consumption based on a full meal deal of energy sources. Here's a couple that are certainly important to the oil & gas industry:

* The US is the biggest per capita energy consumer in the world (~5x greater per person than China).

* The US is by far the biggest consumer of crude oil in the world at an average of 19 million barrels per day. By comparison China at roughly 9.2 million bopd is a very distant second.

As one can clearly see, Americans still love their hydrocarbons and look to be strongly entrenched in that marriage for some time to come. However, perhaps all does not bode well for the future of this blissful state of matrimony.

Just 10 years previous, China's energy consumption was only half that of the US. While coal has been a focal energy source for China in its rapid rise to export stardom, revamping its industrial infrastructure, expanding capacity, and improving product quality in a juggernaut like fashion with a view to lower carbon emmisions at the same time dictates that oil & nat gas are heavily featured on their menu. 

China now wields a big bat in the international oil & gas arena. Flush with bulging pockets of cash they have set their sights on some serious acquisitions. They can be found scouting the terrain in virtually every oil & gas region of the world for potential buy outs or joint ventures. Their entry into the Canadian oil sands is only one example of a number of recent successes on the global stage in this fashion.

Even closer to US security concerns is the fact that Chinese national oil companies (NOCs) have taken dead aim at opportunities within the sovereign borders of the US itself in the past. CNOOC's failed $18 billion dollar run at acquiring Unocal 5 years back is a stark reminder of what could have happened.

While China's fortunes continue to improve and its treasury multiplies, the US's struggling economy may be seen by some to be downright anemic in comparison. Gone it seems, are the glory days when the US could swagger into many a country and secure oil & gas supplies for which they came with relative ease, and little or no real competition. Nowadays, oil giants like Saudi Arabia are shipping more oil to China than to the US, which is just one small glimpse of how the balance of power appears to be shifting.

Will China evolve into an even greater presence on the world stage and in doing so undermine the USA's present status as a world power? Only time, and the US approach to effectively addressing both internal and global energy related concerns will tell.