"No let-up to Chinese demand for oil is yet in sight, suggesting that world prices will continue to move higher during the summer."
Monday, 19 May 2008
1. Production and Prices 2. China 3. Iran's Production Cut 4. Energy Briefs
Although the Sichuan earthquake seems unlikely to set back China’s economic growth by very much, the disaster may have a noticeable impact on China’s energy supply and imports of coal and oil. The area subjected to the quake produces about 22 percent of China’s natural gas supplies and contains many coal mines and hydro-electric dams which generated about 62 percent of the province’s total electricity production. Many of the 396 power stations on the river system and their dams were damaged. Several major reservoirs are being drained to prevent their dams from failing. Beijing ordered coal mines, oil and gas wells, and chemical plants affected by the quake to shut down until the situation could be assessed. Twenty-two coal mines in Sichuan, Chongqing and Gansu provinces were affected by the quake.
Loss of significant amounts of natural gas, coal, and electricity production for an indefinite period suggests that China will have to step up imports of coal and oil products. Already some 700,000 barrels of emergency fuel supplies have been dispatched to the area.
Prior to the earthquake, China’s crude and oil products imports were already increasing rapidly. Crude imports in the first 4 months of 2008 were up 9.8 percent over 2007 to support an increase in industrial production of 15.7 percent in April. Diesel imports in April rose to 520,000 tons from 30,000 tons a year earlier and 490,000 tons in March. Traders say that China is planning to import still more oil in May and June to prepare for the Olympics and to support recovery from the earthquake. No let-up to Chinese demand for oil is yet in sight, suggesting that world prices will continue to move higher during the summer. http://www.investorvillage.com/smbd.asp?mb=2234&mn=108826&pt=msg&mid=4806334